The British Steel Pension Scheme (BSPS) is to close to new accrual, Tata Steel has told union representatives.
Union GMB called Tata’s plan to close the fund “unnecessary and profoundly disappointing”, and said it was preparing a strike ballot.
According to the union, the fund had £13.6bn (€17bn) in assets at the end of November last year, up from £12.6bn at the end of March.
David Hulse, GMB national officer, said the union did not expect to find itself discussing closure to new accrual, following months of negotiations that got underway in November.
“Throughout a long process, we have acted in good faith and negotiated constructively in trying to reach an agreement that addresses what we acknowledge to be a significant deficit in the scheme,” Hulse added.
According to the fund’s most recent annual report from 2013-14, BSPS had a £1.1bn deficit in March 2013 when measured on an on-going basis.
Hulse was critical of Tata’s plans to close the fund to new accrual.
“We have made every effort to compromise with the company, even discussing the possibility of meeting the deficit through changes to member benefits, despite the fact the company is legally obliged to pay for the deficit and has always done so in the past,” Hulse said.
“Sadly, the company rejected this offer out of hand. It appears they are hell-bent on closing the scheme and are not prepared to compromise.”
He said the management of parent company Tata Steel Europe should “seriously consider their positions” after what he deemed a breakdown in trust between the scheme’s sponsor and its workforce.
A spokesman for Tata said the company put forward changes to the defined benefits (DB) fund that would have balanced any changes across the entire workforce.
“We believe the trade unions’ proposals to change member benefits would have unfairly disadvantaged younger scheme members, who would have had to bear most of the impact of the changes.
He added: “We have been unable to come to an agreement that would have enabled defined benefit provision to continue and we will be consulting employees on a proposal to close the defined benefit scheme to future accrual.
It is proposed that future pension provision will be on a defined contribution basis.
BTPS is a DB scheme, with a standalone defined contribution arrangement launched in 2014.
The DB section returned 1.6% over the course of the 2013-14 financial year, and 7.8% over the three years to 2014.