The British Steel Pension Scheme (BSPS) has finally been separated from Tata Steel, after The Pensions Regulator (TPR) issued its formal approval notice to the operation.
The regulator had given is initial consent to the restructuring of the defined benefit (DB) scheme in August, ending a long-running pensions saga between pension holders and the business.
This restructuring was done through a regulated apportionment arrangement (RAA).
Designed for multi-employer schemes, under an RAA the participating employer in a DB pension scheme stops participating in the scheme, and the departing employer's share of the employer debt that would otherwise be due to the scheme is split among one or more of the remaining participating employers.
In this case, the BSPS has received £550m from the parent Tata Steel Group, significantly more than it would receive in insolvency, and a 33 per cent equity stake in Tata Steel UK (TSUK).
BSPS members now have two options: either transfer to a new scheme (if they meet certain qualifying conditions), which will be sponsored by TSUK, or remain in the existing scheme which will transfer to the Pension Protection Fund (PPF).
Savers have until December to make a decision.
All 130,000 members have already received the first in a series of newsletters outlining the proposals for separating BSPS from Tata Steel and the timetable for the consultation, a spokesman for the scheme stated.
Besides receiving information on the available options, members will also be invited to attend meetings at locations across the country to discuss the presented solutions.
For further assistance, a dedicated website (www.bspensionschoose.com) is also now available, as well as a telephone helpline, a spokesman for the scheme said.
The proposal for separating BSPS was first presented in May, and Tata Steel has been waiting for the regulator's approval since then.
In the meantime, the numbers of members transferring out of the BSPS fund have more than doubled.
TSUK employees have been attracted by the increase in the value of transfers made to those leaving defined benefit schemes over the past two years.
Tata took on BSPS when it bought Corus in 2007 for £6.2bn, and the funding deficit has been an increasing problem.
The separation from the scheme could remove the last hurdle to a merger of the group’s European steelmaking operations with those of German rival ThyssenKrupp.