Tata Steel Plans to Close British Pension Plan by End of MonthBy
Employees to start a new defined pension plan in April
Move paves way for company’s proposed European joint venture
Tata Steel Ltd. plans to close its 15 billion pound ($18.3 billion) British pension plan by end of the month, taking the Indian company a step closer to agreeing a possible joint venture for its European operations.
The company will close the British Steel Pension Scheme for future contributions with effect from Mar. 31 and employees will save for their retirement through a new defined contribution pension plan from next month, it said Wednesday in a statement.
Tata Steel has been in talks with Thyssenkrupp AG and others for a joint venture in Europe since last year as part of its strategy to trim losses amid oversupply in the global market. Thyssenkrupp’s Chief Executive Officer Heinrich Hiesinger in November said that the pension liabilities were a major stumbling block an accord.
“The pension was the thorn in the flesh for Tata Steel and the deal was not happening,’’ A.K. Prabhakar, head of research at IDBI Capital Market Services Ltd., said by phone from Mumbai. “Now if the scheme is taken care of, then it becomes easy to disinvest that portion.”
The stock rose as much as 0.9 percent to 486.40 rupees Wednesday, before trading 0.2 percent lower at 9:38 a.m. in Mumbai. The benchmark Sensex Index fell 0.1 percent.
Tata Steel has been seeking to sell or turn around its U.K. operations after years of losses. In December, the company struck a deal with unions to secure future production and jobs at Port Talbot in Wales and other U.K. sites, while it sold off its specialty steels business to Liberty House Group last month.