Tata Steel: Unions demand safeguards on pensions
Unions will seek "cast iron" safeguards that any changes to the British Steel Pension Fund to save Tata's UK plants do not lead to employers "dodging" their responsibilities.
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, inc luding 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, who flew back to the UK today after speaking to Tata officials in Mumbai, 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 British Steel pension scheme is designed to provide "clarity and security" for members.
He told MPs: "Tata understandably wants the sales process to be as swift and as straightforward as possible. However, they assured me they remain absolutely committed to being a responsible seller.
Shadow business secretary Angela Eagle said the proposed changes to the pension fund risked setting a "very worrying precedent" for other company schemes.
The statement from Community, Unite and the GMB, said: "There has been a lot of speculation that any sale of Tata's assets would involve the BSPS going into the Pension Protection Fund (PPF). The trade unions believe that such a move would be an unmitigated disaster. The PPF is a financial safety net but it would see every member of the scheme take an unnecessary cut in pension benefits. The financial health of the BSPS is such that going into the PPF can certainly be avoided.
"It is important that all stakeholders continue to explore all available options that avoid the need for the scheme to go into the PPF, which would be the worst deal for scheme members.
"We will seek to work constructively with the UK Government and the scheme trustees to deliver the best possible deal for our members. We need to ensure that there are cast iron safeguards in place so this unique situation does not result in employers dodging their pensions responsibilities."
Ex-Liberal Democrat pensions minister in the former coalition Steve Webb has warned that the Government is "going down a very dangerous path" in seeking to change the law.
Mr Webb, director of policy at pensions firm Royal London, said: "The desire to save steel jobs is entirely understandable, but there are huge risks if a quick fix for this problem were to undermine the carefully constructed pension protection framework.
"The pensions of millions of workers and pensioners depend on employers honouring the pension promises that they have made.
"A deal on Tata must not create a precedent or a loophole which could be exploited by firms keen to walk away from their pension liabilities. Ministers must tread with extreme caution in this area."
Allan Johnston, chairman of the Board of Trustees of the British Steel Pension Scheme, said: "The trustees welcome the Government's decision to consult on changes to the law applying to the scheme.
"The trustees will be writing to members over the coming days to make clear its belief that, with Government support, it should be possible to modify benefits so as to allow the scheme to remain outside the Pension Protection Fund (PPF) indefinitely and on a low-risk basis.
"Although this would entail future pension increases being cut back from their current levels, benefits would be more generous than those provided by the PPF for the vast majority of scheme members.
"The primary focus of the trustees is to secure the best outcome for scheme members. Whilst the current pension protection framework provides a valuable safeguard for pension scheme members generally, the circumstances of the British Steel Pension Scheme are such that its assets could be better used in paying member benefits than potentially swelling a PPF surplus or insurance companies' profits."
Meanwhile, the United States Department of Commerce announced it will levy anti-dumping and anti-subsidy duties of up to 451% on Chinese corrosion-resistant steel.
Chinese steel exports have become a contentious issue, hitting producers across the US and Europe, including the UK.
The decision comes a week after the US said it would impose duties of more than 500% on Chinese cold-rolled flat steel.
Secretary of State for Work and Pensions Stephen Crabb said: "Britain's steel industry is an important part of our economy which is why we are doing everything we can to support it and secure a long-term viable future.
"As part of this it's right that we do all we can for the British Steel Pension Scheme, to support a sale and deliver clarity for scheme members."
The Government consultation, to run until June 23, sets out a number of different options, saying: "The exceptionality of the situation means that we need to think seriously about all possible options."