Trade union Unite has called on the British Steel Pension Scheme (BSPS) trustees and Tata to agree on improved benefits for scheme members, after Tata announced a £2.2bn scheme surplus.
The group disclosed yesterday, 16 May 2018, that following the completion of its UK pension restructuring, the new scheme has a non-cash £2.2bn surplus on an IAS 19 accounting basis, allowing it to “run its required low-risk investment strategy protecting its members”.
However, Unite believes that the higher than expected surplus “strengthens our case for benefits to be restored” to pre-1997 services.
A Unite statement said: “It was always expected the new BSPS would start with a significant buffer to enable it to pay out benefits to all members on a low-risk basis. We should be absolutely clear that this buffer is not Tata’s money, it is scheme members’ money which is ring-fenced to pay out benefits over the lifetime of the scheme.
“The trade unions have always said that if scheme funding allows then Tata and the trustees can and should improve benefits in the future. The surplus for the new BSPS that Tata has reported today is higher than we expected, which we welcome as it strengthens our case for benefits to be restored.”
Tata said that a non-cash gain of £1.64bn was gained over the Q1 2018, calling it an optimal and sustainable outcome for pensioners, current employees and the UK business.
“The trade unions call on Tata and the trustees to agree to sit down with the unions to agree a process that ensures members will benefit from improvements to scheme funding going forward. The number one priority for the unions will be improving pension increases for members with pre-1997 service”, Unite added.
In September 2017, The Pensions Regulator approved a Regulated Apportionment Arrangement, separating BSPS from Tata Steel UK, accompanied by a one-time settlement payment of £554m as well as a 33 per cent minority stake in Tata Steel UK to the BSPS.
In March 2018, the trustee of the New British Steel Pension Scheme has confirmed it has made the first payments to the 80,000 members that transferred from the old scheme.
BSPS trustees have been contacted for comment.