£460m deficit in Tata pension fund, Scunthorpe steelworkers and veterans told
AROUND 16,000 past and present employees of Scunthorpe's Tata Steel works have been told of a £460 million deficit in their pension fund.
The residual shortfall is the first in the 45-year history of the British Steel Pension Scheme.
Liabilities were found to out-weigh the assets of the Glasgow-based scheme following a triennial valuation of the pension fund as it stood at March 31, 2011.
Trustees have warned stake-holders in North Lincolnshire the funding position has further deteriorated since then.
This is in common with other UK pension schemes generally.
But a recovery plan agreed with the Indian owners of Tata Steel is expected to return the scheme to a fully-funded position by March 2026.
The fund has also announced a £635 million rise to almost £12 billion in assets for the year ending March 31, 2012.
Allan Johnston, the chairman of the trustees, said: "The deficit was not unexpected, given the background of sustained challenging economic conditions.
"It is disappointing that this is the first triennial valuation where such a deficit has been recorded.
"But a funding level of 95 per cent reflects the continued strength of the scheme, relative to many other comparable UK pension arrangements."
Mr Johnston said when the trustees agreed to the recovery plan, they took account of what would be affordable for Tata Steel in "current challenging economic conditions".
They also had an expectation that the position would improve in the future.
The chairman said the trustees had seen no compelling reason to adjust the recovery plan while an update on the scheme's funding position was carried out.
Revised provisions for the contribution and benefits framework of the scheme came into effect from April 1 this year.
As part of the changes, employees will be allowed to make extra voluntary contributions.
A nursery pension arrangement will be set up for new joiners.
The British Scheme Pension Scheme has around 157,000 members but around two thirds are pensioners.
Sean Scorer, chairman of the Scunthorpe works multi-union committee, said: "The discussions in the last 12 months delivered a sensible solution to future funding costs.
"We are confident the agreement reached to address the past service deficit will have been handled in such a manner as to ensure the best interests of the company and the pension scheme are protected going forward."