BSPS officially separates from Tata Steel UK

The British Steel Pension Scheme has now officially separated from Tata Steel UK and a number of affiliated firms.

In a statement made today, 11 September 2017, Tata Steel UK noted that it has received confirmation from The Pensions Regulator on the approval of its regulated apportionment arrangement in respect of the BSPS.

Tata Steel has made a payment of £550m and shares equivalent to a 33 per cent equity stake in the company to the BSPS as part of the RAA. These have been issued to the BSPS trustee under the terms of a shareholders’ agreement.

The arrangement means members of the BSPS will have the option of switching to a new scheme, the New BSPS, or moving with the old BSPS into the Pension Protection Fund. The new scheme is subject to certain qualifying conditions being met.

The new scheme is to have lower future annual increases for pensioners and deferred members than the BSPS, resulting in less risk for Tata Steel UK and an improved funding position.

Tata Steel has noted that the BSPS trustee will communicate with scheme members about the changes to the pension scheme in due course.

Tata Steel Group executive director Koushik Chatterjee said: “The completion of the RAA follows many months of hard work to provide the most sustainable outcome for pensioners, current employees and the business.

“I would once again like to extend my gratitude to all the stakeholders - in particular The Pensions Regulator, Pension Protection Fund, the Trustee of the British Steel Pension Scheme, its members, the unions, our employees and the governments of the UK and Wales. Without their significant time and effort, as well as constructive engagement, this process would not have been completed.

“Although much work is still needed to ensure the business is competitive in future, the next step in this pensions process involves necessary formalities to set up the new scheme with a lower risk profile following the necessary member consent process led by the trustee. This will take some time to implement given the wide membership base of the scheme. The net financial impact of the RAA including the payment of the agreed £550m settlement amount will be reflected in the Q2 FY18 financials for the company.”

Quantum Advisory partner and actuary Stuart Price: “The deal seems to have a broadly happy ending compared to the doomsday scenario that could have occurred and I’ve no doubt we will see more of these deals in the future.”

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