Tata Steel has averted a major industrial action in the UK, after unions voted in favour of a new deal from the company, which would allow them to keep their existing defined benefit pension scheme open to existing members.

Last month unions called off a one-day strike and suspended other forms of industrial action after Tata Steel made the new offer. Over 70 per cent of those who voted from three unions — Community, Unite and GMB — and just over half from a fourth union, UCATT, voted to accept the proposals.

“There is a clear mandate from all union members for the Steel Committee to seek further meetings with the company to finalise the arrangements to keep the British Steel Pension Scheme Open,” said Harish Patel, national officer for the Unite union.

Roy Rickhuss, General Secretary of Community and Chair of the National Trade Union Steel Coordinating Committee, warned the challenges did not end and that the dispute had pointed to a “serious breakdown” in trust and confidence.

A spokesperson for the Community union said that unions had accepted a number of measures that would reduce the costs of running the existing scheme for Tata Steel, including a cap on pensionable earning increases, and actuarial reductions if members of the scheme chose to retire earlier than the official UK retirement age of 65, though the ex-gratia payments would make up for part of this. The actuarial reductions would be phased in over a number of years.

The long running British Steel Pension Scheme had run up an estimated £2 billion deficit, amid rising longevity and a tough financial market. Last year, Tata Steel paid £103 million towards the scheme, made up of normal contributions, and contributions to the previous actuarial round’s deficit. It closed the £14-billion scheme to new members last year, and after negotiations on cost savings to the existing scheme broke down, it had begun consulting on proposals to close the scheme.

In May, unions voted for industrial action over the proposals and were all set for a one day all-out strike.

A spokesperson for Tata Steel said the agreed proposal represented a 'fair and balanced solution in which the UK employees will continue to be provided with high-quality pensions. The new arrangements, including the modifications to scheme benefits, will address a significant proportion of the pension scheme’s projected deficit. Other actions to be agreed with the pension Trustee will address the balance."