London: Tata Steel and British authorities said on Friday they have agreed on a plan to restructure the firm’s British pension scheme, ending one aspect of uncertainty for 1,30,000 current and retired steelworkers.
Indian-owned Tata announced plans last year to sell its U.K. operations, including the Port Talbot steelworks in Wales. But after interventions from the British government and unions it agreed to keep the business, which employs 8,000 people in Britain.
A sticking point was 15 billion pounds (USD 19.5 billion) in British pension liabilities, which Tata considered onerous. Steelworkers voted this year to accept lower benefits if it meant protecting jobs.
Tata Steel U.K. said Friday it had signed an arrangement with pension trustees to separate the plan from the company, in exchange for a 550 million pound cash injection and stake for the pension fund in Tata’s business.
The deal addresses one obstacle to a proposed merger between Tata’s British businesses and Germany’s Thyssenkrupp.
Unions welcomed the agreement, saying it helped end members’ uncertainty about their retirement income.
Tata Steel Group Executive Director Koushik Chatterjee said the deal was an “important milestone in Tata Steel U.K.’s journey towards a sustainable and enduring future, with pension obligations whose risk profile would be consistent with the underlying business”.