Tata Steel workers in Britain voted to accept pension benefit cuts in return for safeguards on jobs and investment, although the proposal still faces regulatory hurdles. The 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 Tony Brady, national officer of the Unite trade union.
In return for pension changes, Tata Steel has pledged to guarantee production and jobs at Britain's largest steelworks in Port Talbot, Wales, for five years and to invest 1 billion pounds in its UK 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 rare regulatory approval to cut benefits for all 130,000 BSPS members and to spin off the scheme into a standalone entity.
Tata says its UK unit, which is set this year to post its first profit in five years, will fail if it has to keep ploughing funds into a scheme with 13 times more pensioners than paying employees.
The company is also seeking to spin off the pension scheme because Germany's Thyssenkrupp (TKAG.DE), with which it is in merger talks, is not prepared to take on any UK pension liabilities in the event of a tie-up.
"Steelworkers have taken a tough decision. It is vital that we now work together to protect the benefits already accrued and prevent the BSPS from free-falling into the pension protection fund (PPF)," said Roy Rickhuss, general secretary of the union Community.
The PPF is a lifeboat for failing UK pension schemes. Tata Steel's UK workers were under pressure to back a deal that secured jobs and investment because if the company fails, they will face deeper benefit cuts under PPF payout terms.
Stephen Kinnock, member of parliament for Aberavon, Wales, said: "What we have seen today is that the workforce will strain every sinew to save our industry. If fulfilled, the package voted on today should secure the future for Port Talbot."
