Warning over steel pensions shake-up as Government seeks to save £2.5 billion

Three unions issued a joint statement warning that if the scheme has to go into the Government’s Pension Protection Fund, it would be an “unmitigated disaster”, with workers and pensioners taking a cut in benefits.

The Government launched a consultation on changes to pensions law, including cutting the British Steel Pension Fund (BSPS) long-term liabilities by benchmarking it to the consumer price index (CPI) rather than the higher retail price index (RPI), in a move that could save £2.5 billion. Tata is still evaluating bids for the UK business although there are now suggestions it could change its mind and decide not to sell.

Business Secretary Sajid Javid told the Commons he had reiterated the Government’s willingness to offer support, adding there were a number of “credible” bidders. Mr Javid said the consultation on the pension scheme is designed to provide “clarity and security” for members.

But Jillian Thomas, managing director of Future Life Wealth Management, based in Sheffield, said: “The Government’s proposals to change the pension to cut the pension fund liability will set a dangerous precedent. Essentially they are wanting to make Tata Steel more sellable to private investors but this is in direct conflict with the stance they are taking on the collapse of BHS in relation to their pensions deficit.

“There needs to be a serious debate on pensions to ensure it is fully understood across the industry and the government about how these proposals will affect current and future employees in the industry.”