Concern over possible changes to Tata pensions

Concerns have been voiced over possible changes to pension laws in a bid to secure the sale of Tata Steel's UK assets.

Thursday, 26th May 2016, 8:01 am
Updated Thursday, 26th May 2016, 8:08 am
Tata Steel has a plant in Stocksbridge in Sheffield and two others in Rotherham

Ministers have been warned not to rush into far-reaching changes to pension laws after the Government confirmed it is looking at 'all options' in relation to Tata's £15 billion UK pensions liabilities - seen as one of the major obstacles to a successful sale.

Business Secretary Sajid Javid is due to make a Commons statement on Tata's efforts to sell its UK assets, including a plant in Stocksbridge and two in Rotherham, after returning from talks in Mumbai with senior Tata representatives.

Ministers are thought to be preparing to launch a consultation on possible legal changes which could enable a major restructuring of the Tata pension fund, including cutting its long-term liabilities.

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The Department for Business, Innovation and Skills said it recognised that the pensions issue was a 'challenge'.

"We are exploring all options and engaging with Tata and other interested parties in order to see what support Government can provide," a spokesman said.

Welsh First Minister Carwyn Jones, fighting to save steel jobs in south Wales, said: "It's right to say - let's not pretend otherwise - that it's unlikely that any buyer will come forward with the pension liability there."

Ex-Liberal Democrat pensions minister in the former coalition, Steve Webb, said the Government was 'going down a very dangerous path' in seeking to change the law.

"Everyone has huge sympathy for steel workers and for efforts to protect jobs, but rushed changes to pension rules risk driving a coach and horses through the pension security of hundreds of thousands of workers, well beyond the steel industry," he said.

"The rules to protect pensions have been carefully worked out over many years. Rushed legislation could open the floodgates to employers who may wish to walk away from their pension schemes rather than honour their pension promises. The Government must tread very carefully in this area."

For Labour, shadow work and pensions secretary Owen Smith said: "Steel workers' pensions must be protected, they've earned them with hard graft over many years."