Your pensions are safe, Black Country steel workers told
Trustees of the giant £15bn steel industry pension fund today moved to reassure pensioners they have nothing to fear from the merger of Tata Steel and Thyssenkrupp.
The Black Country's industrial heritage means it is home to thousands of pensioners who worked in the steel industry, including former foundries in Bilston, Halesowen and at Round Oak in Brierley Hill.
They are among 130,000 members nationwide of the British Steel Pension Fund (BSPS), which owns a major stake in Tata Steel UK.
The UK and European arms of Tata Steel will now become part of Europe's second biggest steel business, following this week's news of the start of a merger process with German steel giant Thyssenkrupp.
The deal has only been able to go ahead after the Tata was able to separate itself from the huge pension fund, which has estimated liabilities of £15 billion.
The pension deal, called an RAA or regulated apportionment arrangement and given final approval earlier this month, will see Tata Steel pay £550 million into the old pension fund, which goes into the UK pensions lifeboat, the Pension Protection Fund.
At the same time, the fund trustees are being given a one third stake in Tata Steel's UK business.
A new pension has been set up for Tata Steel's 8,500 existing UK workers. Steel unions agreed to the deal at the time, saying: "We do not celebrate the confirmation of the RAA, but under the circumstances this represents the best outcome for members of the BSPS.
"All of the experts, and the independent pensions regulator, have concluded that had the scheme not been separated it would have meant the inevitable insolvency of Tata Steel UK."
But as the UK business becomes part of a joint European operation with German steel giant Thyssenkrupp, it will inevitably dilute the trustee's stake in the overall business.
In a statement the fund trustees said they would continue to hold 33 per cent of the shares in Tata Steel UK which, with Tata Steel Europe, would jointly have a 50 per cent stake in the new business with Thyssenkrupp.
“The proposed merger will have no impact of the terms of the RAA and existing scheme members,” they added.
The safety of steel worker pensions is also a key factory for UK unions as they study the details of the merger deal.
Roy Rickhuss, general secretary of Community and chairman of the joint committee of steel unions, which includes the GMB and Unite, said: "We must also be assured that Thyssenkrupp’s pension liabilities will be ring-fenced with a cast-iron guarantee that UK steelworkers will never fund German pensions."
