The UK government is reportedly considering a law change to plug a loophole in its pension laws to help Indian steel gaint Tata Steel save jobs at its Port Talbot plant in south Wales, a media report claims. A deal to reduce Tata’s financial burden in the 15-billion-pound pension scheme for its British steel business is central to a plan to save Port Talbot and keep it open, conceived last year by interim chairman Ratan Tata. It is understood that the deal hinges on amending a quirk in the UK law that grants one group of retirees exceptional benefits, ‘The Sunday Times’ reports.
Tata Steel is trying to slash the scheme’s costs by setting up a new retirement pot paying lower benefits.
The new scheme has been established as an alternative to using the Pension Protection Fund (PPF) as Tata has offered to pump 550 million pounds into the scheme.
The steel pension fund has about 130,000 members — a legacy of when the industry employed hundreds of thousands of workers.
Of these, about 5,800 are entitled to exceptional benefits that were designed to bridge the gap between early retirement and reaching the state pension age in Britain.
However, a loophole means that these members would be better off entering the PPF than joining the new Tata-sponsored scheme.
According to the newspaper, Tata Steel has reportedly warned the UK government that failing to close this loophole could make its attempt to set up a new scheme unviable, because it would cost the company another 500 million pounds to 600 million pounds.