Tata Steel looks for pension deal with workers for merger with ThyssenKrupp
26 September 2016
Tata Steel is set for crucial talks with trade union representatives of its British steelworks to settle the deadlock over a £15 billion pension scheme for its workers that would clear an obstacle to its merger with German rival ThyssenKrupp, British media reported on Sunday.
Indian steel giant Tata Steel is set for what are believed to be crunch talks with trade union representatives of its UK steelworks to settle the deadlock over a £15-billion pension scheme for its workers, the main obstacle in its merger with German rival ThyssenKrupp
A report in The Sunday Times said Tata Steel will start two days of talks with unions on Monday to break the deadlock over the pension scheme to try to secure the merger of its European operations with those of ThyssenKrupp.
Krupp and Tatas have held talks on combining their continental European steel operations, as global overcapacity weighs on prices and profits.
Earlier reports had said that Tata Steel was likely to put the sale on hold in the wake of this summer's British referendum verdict to exit the European Union, which has raised concerns about the viability of the British steel industry that has already been under stress.
The British government has been trying to keep Tata Steel running although it could do little to rein in soaring pension fund demands that made Tata's UK steel business unviable.
Earlier reports had pointed to the British government drawing up special legislation to lower pension benefits for many of the 130,000 members of the old British Steel pension fund. It has also offered loans and is investing in potentially 25 per cent equity in the business.
Tata Steel acquired the British Steel Pension fund in 2007, as a part of the Corus acquisition.
The British Steel Pension fund had 130,000 members and a deficit of £700 million (about $900 million) when Tata acquired the UK operations of Corus Steel.
The government of then Prime Minister David Cameron had proposed a change in legislation to reduce payouts by altering the inflation link to wage hikes, but has not effected it for want of political will.
Tata Steel, however, said in a statement that it "continues to responsibly develop options to identify the best prospects for the future sustainability of our UK operations and the best outcome for members of the British Steel Pension Scheme".