British industry giant Tata Steel will close its defined benefit pension program for new employees and instead replace it with a defined contribution pension scheme from March 31, 2017 and April 1 2017 respectively. After its consultation process with 4,000 employees across the United Kingdom — along with opinions from trade union representatives — the steel plant has formally announced its compromised position.
Tata Steel’s earlier proposals of having a defined contribution scheme with a 3% employer and employee contribution were shut down. According to its spokesperson, the new resolution is not the end for its collaboration with trade unions and government bodies to find a sustainable solution for its UK operations.
According to the spokesperson of the British Steel pension scheme trustee board chairman Allan Johnston, the board welcomes the conclusion between Tata Steel and its employees. Johnston said the board believes the scheme’s closure could help Tata Steel secure its future outside the Pension Protection Fund and provide better benefits for its members.
Earlier in February, Tata Steel workers voted to cut pension benefits in return for job safeguards and investment. Legal and General would continue to manage the defined contribution section of Tata Steel. British Steel is then to receive maximum employer contributions of 10% per 6% employee contribution.