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Tata Steel To Close Its UK Pension Scheme
The £15 billion British Steel Pension Scheme (BSPS) operated by Tata Steel is due to close to future contributions before it has to make a £60 million payment next year, with the deadline on March 31st.
The move would remove a significant financial burden from the UK arm of the company, according to the Financial Times, following years of sustained losses that at one point reached £1 million a day. The sector as a whole has been suffering because of a drop in steel prices in 2015. Since then, hikes in steel prices, a drop in the value of the pound and cost cuts have all helped boost financial performance.
The BSPS has been something of an obstacle for the company finding a solution to help its UK business, which was put up for sale earlier this year. A deal has yet to be agreed upon, however, meaning that some 11,000 jobs and the Port Talbot steelworks are still at risk.
In September, Tata Steel announced a further loss, dropping £360 million into the red after tax. The European arm of the company, including Port Talbot, did see an operating profit of £90 million in the three months to June of this year, which it put down to UK cost cuts and an increase in exports following the drop in sterling after the Brexit vote on June 24th.
It was thought back then that if Tata Steel doesn’t remain in the UK, the pension funds deficit could climb higher, with some believing that it could even reach £700 million.
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