Comments
Tata Steel’s European head has warned that the deficit under the current pension scheme could jeopardise the long term future of the company’s UK operations if not tackled.
In an “open letter” ahead of the results of the ballots by three of the four unions representing Tata Steel’s UK employees, Karl Koehler said that the company would work with unions and employees to address concerns about aspects of the proposed new scheme.
“I hope everyone agrees with one thing: that we have to change the pension scheme in order to deal with a shortfall as high as 2 billion pounds which is not sustainable and which would damage the long term prospects of our company in the UK,” he wrote.
Defending the proposal to shift employees from the existing British Steel defined benefit scheme to a new defined contribution scheme, Koehler said that it would protect the benefits that employees had earned and would be an “affordable and sustainable pension scheme through changes that are fair and balanced for all those who work for us.”
“We are still facing very difficult business conditions in the UK. Indeed our UK operations as a whole are still losing money and we will need further significant investments from Tata Steel if we are to build a sustainable business here,” he said. Announcing its fourth quarter results earlier this month, Tata Steel reported a Rs 4,951 crore writedown largely relating to the long products division based in the UK.
Employee issues
Among employee issues Koehler pledged to address were the removal of the option to retire early at 60 (the UK official retirement age is 65), working physically demanding jobs beyond 60, and the removal of a benefit of the current scheme that gave some workers an additional year’s pension for every seven years served.
Tata Steel had originally proposed to amend, but maintain the existing defined benefit pension scheme dating back to the days of British Steel, to help fill an estimated two billion pound deficit – the result of retired employees living longer and longer, and also tepid returns from financial markets.
Consultation with trade unions
After failing to reach an agreement on reforms, Tata Steel began consulting employees on proposals to replace the system with a defined contribution scheme that would cut the company’s costs of running the scheme, and reduce its risk exposure.
Koehler’s comments come as Tata Steel’s consultation with workers over the proposals comes to an end, during which time it says it received over 3,000 emails and letters, and had 100 roadshows. The results of the ballots on industrial action by the Community, GMB and UCATT unions are due Friday afternoon, while that of a fourth union, Unite, representing some 6,000 workers are due in early June.
Under UK rules, unions must offer members the option of strike action as well as action short of strike action. The results are determined by a simple majority. Unions must give the company a week’s notice before any action can take place.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.