The government may have to inject £2bn into the British Steel Pension Scheme to sell the Tata Steel business, according to the frontrunner to buy the assets.
Head of Liberty Group Sanjeev Gupta who is the frontrunner to buy assets from Tata Steel, was quoted in the Daily Mail saying the government may have to pay up to £3bn in total to finance a rescue package for the steel industry.
He said while £2bn would be needed to the plug the deficit of the £15bn pension scheme, the government would also need to ensure competitive energy prices.
The industrialist's comments came as it emerged the sale of Tata's UK business would start by next Monday.
According to Tata Steel, the latest annual funding update as of 31 March 2015 showed a deficit on an on-going basis of £485m, which is equivalent to a funding level of 97%. This was an increased deficit from the last formal actuarial valuation as at 31 March 2014 when the scheme reported a residual deficit on an on-going basis of £90m.
However several newspaper reports have quoted experts predicting the deficit may have increased to as much as £2bn.
The scheme has a total of 130,000 members, made up of about 15,000 active members, 30,000 deferred members (former employees not yet at retirement age) and 85,000 pensioners.
Defined benefit (DB) schemes that provide GMPs must revisit and, where necessary, top-up historic cash equivalent transfer values (CETVs) that have been calculated on an unequal basis, a landmark court judgment says today.
Regulators must act now to impose some "proper regulation" to stop another defined benefit (DB) transfer advice disaster, saysTim Sargisson.
Opportunities for defined benefit (DB) schemes to pursue investment approaches that help repair the UK’s economy cannot stand in the way of improving member outcomes, Aegon says.
More members transferred out of defined benefit (DB) pension schemes in October after September's record lows while values were surprisingly stable, according to XPS Pensions Group's Transfer Watch.
Joanna Smith says trustees will need to accurately identify if covenant issues are short-term affordability concerns, or the start of more material deterioration.