Tata staff have voted in favour of changes to their pension scheme that will mean less generous retirement payouts but guarantee jobs and secure investment in the UK steel-making business. Unions balloted members working at Tata over proposals that would move them from a final-salary scheme to a defined-contribution system. In return, the company pledged no compulsory redundancies, £1bn of investment over 10 years, and a commitment to keep open two blast furnaces at Tata’s sprawling Port Talbot site into the next decade. The new deal would replace the current pension scheme with an arrangement under which the maximum contribution from Tata would be 10pc, plus a 6pc contribution from staff.
Unions Community, GMB and Unite, who make up the vast majority of Tata’s 10,000 UK staff, said support for the change was strong, with the yes vote running at between 72.1pc and 75.6pc.
Roy Rickhuss, general secretary of Community, said: “Steelworkers have taken a tough decision and have shown they are determined to safeguard jobs and secure the long-term future of steelmaking – nobody wanted to be in this situation.”
Tata had warned that the huge £15bn British Steel Pension Scheme could risk the future of its UK steel business.
Trustees of the pension said the 140,000-member scheme could report a deficit of between £1bn and £2bn at its next valuation.
Tata would have to pay as much as £200m a year for 15 years to plug this funding gap, and trustees said they had been told by the business it could not afford these contributions and would likely collapse as a result.
In the event of a Tata collapse, steelworkers would see their retirement scheme dropped into the pension protection fund “lifeboat”, possibly meaning even smaller payouts.
David Hulse, national officer for Unite union, said: “Steelworkers have done their bit, it’s time for the government step up and do theirs. Thousands of skilled jobs rely on steelmaking and the industry supports the whole UK manufacturing sector. Instead of insulting steelworkers by classing their industry as a ‘low priority’, the government must set out as strategy for steel that recognises it as a high priority for investment and innovation.”
Securing a change to the pension scheme is seen as an important step in securing the future of steel-making in the UK.
Tata tried a wholesale disposal of its British steel business last year as the industry was reeling from a crisis that saw thousands of jobs go. However, the huge pension fund proved too much of a hurdle for potential buyers and Tata abandoned the sale, instead selling off parts of it.
The deal also paves the way for Tata to seek a deal in which the pension scheme is split off from the company and becomes self-sufficient. However, this would involve what one Tata insider described as the business paying a “vast amount of money” to free it of this responsibility.
A Tata spokesman said: “We recognise this has been a difficult decision for employees and it shows they are doing everything they can to develop a sustainable future for the business.”
A Government spokesman added: “This positive vote is an important step forward for the future of Port Talbot and Tata Steel in the UK. It is testament to the commitment of its workforce that they are willing to work so constructively with the owners to secure the future of the plant. The Government will play its role in supporting the steel industry to help deliver a sustainable future.”