Tata Steel is to consult with unions on the closure of the British Steel Pension Scheme (BSPS) and the introduction of a defined contribution (DC) fund.
The proposal forms part of a wider plan agreed with three workers’ unions to keep the company’s Port Talbot plant operational.
Tata Steel has agreed to keep the plant operational for a minimum of five years, avoid compulsory redundancies and invest £1bn (€1.2bn) into the site over the next 10 years.
However, the plans are conditional on the “structural de-risking and de-linking of the British Steel Pension Scheme fund from the business”, Tata Steel said in a statement.
This is set to include the closure of the fund to future accrual.
The PPF declined to comment on the proposals, but, in June, it told a government consultation that the pension scheme should not be permitted into the lifeboat fund if it severs ties with its sponsor.
The Pensions and Lifetime Savings Association has also opposed this option.
The BSPS has argued it would not pose an excessive threat to the PPF.
The joint statement from unions Community, Unite and GMB welcomed the pledges on investment, job protection and steel production but said the proposed closure of the BSPS to future accrual was “clearly of serious concern to all members”.
“After a detailed discussion, union reps have agreed to ballot all members on the proposal in the new year,” the statement said.
The new DC scheme would have an employer contribution rate of up to 10% and an employee contribution rate of 6% maximum, the unions said.
Tata Steel initially proposed contributions of 3% each from employer and employees.
Earlier this year, the BSPS reported deficit of £1.5bn, but this was almost completely offset by investment gains over the summer to just £50m on a technical provisions basis as of mid-October.
A spokesperson for the Pensions Regulator said: “We note today’s announcement regarding the future of Tata Steel. We continue to engage with the trustees, employer and government on the issues facing the British Steel Pension Scheme. We will only comment in more detail if and when it is appropriate to do so.”
While the proposals announced yesterday relate to the Port Talbot site, Tata Steel also operates two other UK steel factories.
One site, in South Yorkshire, is to be sold to Liberty House Group.
The future of the third site, in Hartlepool, is uncertain.
Roy Rickhuss, general secretary of workers’ union Community, said: “We will continue to work hard with the companies involved to secure the investment necessary to ensure those businesses grow and that our members are protected.”