British Steel pensioners ‘collateral damage’ in Tata Steel UK rescue deal
Yorkshire Post reported that thousands of former British Steel workers in Yorkshire are seeing their pensions sacrificed, to help balance the books of a firm many of them never worked for. Former British Steel workers across Yorkshire are angry at having to accept worse pensions that could lose up to 40% of their value to help save Tata Steel finances.
As young men joining their local steelworks, they were made a simple promise, start paying into a pension scheme that was “as good as it could possibly be” and it would look after them and their loved ones in old age. But decades later, they are finding that promise may no longer hold.
For many in Yorkshire, being a British Steel employee represented not just a job for life, it was a way of life. Sons, fathers and grandfathers all often worked at the same plant and, at its height in the 1960s and 1970s, British Steel employed more than 260,000 people; largely clustered in five main areas South Yorkshire, Teesside, Scunthorpe, South Wales and Scotland. British Steel was privatized in 1988 and in 1999 a merger resulted in it becoming Corus.
Eight years later, Indian conglomerate Tata Steel bought Corus. But Tata’s hopes of making a success of the business did not come to fruition – and the firm pointed the finger of blame at the GBP 15 billion pension scheme for its financial woes; warning the entire business faced collapse, taking thousands of jobs with it. As a result, unions thrashed out a compromise last year to allow Tata to ditch the pension scheme in exchange for keeping the giant Port Talbot facility in South Wales in operation for the next ten years.
It now means 125,000 members of the company’s pension scheme are facing major changes to their payouts, with those whose service occurred either largely or entirely before 1997 being worst-affected as annual inflation-linked rises for all years of service before then are essentially removed.
The result, warn representatives of a 4,000-strong Facebook group called ‘British Steel Pensions Members’, will be many ex-employees losing out on thousands of pounds they had been budgeting for. Mr Stefan Zaitschenko, from the group, says pensioners are “collateral damage” in the deal and fears many of those due to be affected by the changes from next March do not fully understand what is on the cards.
Under the terms of the agreement, approved this week by The Pensions Regulator, individuals’ pensions will be transferred into a ‘lifeboat’ scheme called the Pension Protection Fund (PPF), where there will be a 10% reduction to their values. But they can alternatively opt to transfer to a revised scheme sponsored by Tata known as British Steel Pension Scheme 2, which will pay less money than currently but generally provides more than the PPF arrangement.
Source : Yorkshire Post