By Maytaal Angel
LONDON (Reuters) – Tata Steel’s British workers voted on Wednesday to accept pension benefit cuts in return for safeguards on jobs and investment, although the Indian-owned firm’s plan to spin off its entire pension scheme still faces regulatory hurdles.
Wednesday’s vote allows Britain’s largest steelmaker to close its 15 billion pound British Steel Pension Scheme (BSPS) to future accrual and replace the final salary scheme with a less generous defined contribution scheme.
“Steelworkers have made great sacrifices … Those sacrifices must be repaid by Tata Steel honouring its commitments on investment and job security. Nothing less would be a betrayal and add to the deep mistrust that steelworkers now have for the company,” said Unite the Union’s national officer Tony Brady.
In return for pension changes, Tata Steel has pledged to guarantee production at its flagship steel plant in Port Talbot, Wales, for five years and to invest 1 billion pounds in its British business over the next decade.
The company’s new defined contribution scheme will cover its existing 11,000 UK employees. The firm is however seeking regulatory approval to cut benefits for all 130,000 BSPS members and to spin off the scheme into a standalone entity.
Tata Steel is currently in talks to merge its European and UK assets with Germany’s Thyssenkrupp , but the German steelmaker is not prepared to take on Tata’s UK pension liabilities in the event of a tie-up.
(Reporting by Maytaal Angel; Editing by Keith Weir)