Commenting on today's announcement regarding the future of the British Steel Pension Scheme, Steve Webb, Director of Policy at Royal London said: "This deal represents a good balance between trying to save steel jobs and trying to protect members' pensions. Over the course of this saga some much more unacceptable options have been considered. One would have been to change pension law just for the benefit of this scheme. Another would have been to create a new 'headless' British Steel Pension Scheme without a sponsoring employer. It is good that both of these have been rejected. It is important that scheme members receive clear information about the options now open to them and are given the advice and guidance that they need to make the choice as to whether to join the new pension scheme or remain in the existing scheme and eventually have benefits paid by the Pension Protection Fund".
Pensions expert Stuart Price, Partner and Actuary at Quantum Advisory, said: “The deal that has been secured is as we expected and, given the circumstances, in my opinion is best deal for all those involved. The current Tata Steel workforce will keep their jobs with significant investment from Tata in Port Talbot facilities, and the 130,000 members of British Steel Pension Scheme (pensioners and non-pensioners) will get the option to transfer to a new scheme that will have lower increases in the future, but better than the alternative of relying on the safety net of the Pension Protection Fund (PPF).
“The new scheme will have an additional contribution from Tata of £550m plus a third stake in Tata Steel (UK) plus the continued backing of Tata Steel, the latter of which is unusual in the current circumstances but provides extra security for the members.”
Commenting on the announcement that The Pensions Regulator has allowed Tata Steel to separate from the British Steel Pension Scheme, Richard Farr, Managing Director at Lincoln Pensions, said: “Following landmark cases concerning Kodak and Halcrow this outcome comes as no surprise and signifies another reality check for zombie companies.
“The key question is how much deficit will be transferred into the new scheme? Only this will inform the market on how much risk was taken off the table and how much the new scheme members are still running.”
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