The government plan to cut pension benefits to help save Tata Steel’s UK operations, however they have been warned that if they do so this could take ministers down a dangerous path.
Ministers are considering changing the measure use for British Steel pension increases to cut its liabilities. The government is expected to propose basing the scheme’s annual increase on the Consumer Prices Index (CPI) inflation measure, which is usually below the current Retail Prices Index (RPI) measure.
Some Union leaders are likely to support the proposals, however Mark Turner of the Unite Union explained that he wanted to see the detail, they don’t want any changes if they’re going to be detrimental to the rest of the industry. The British Steel pension scheme has about 130,000 members, we are not sure exactly how many will be affected by the plan. Once the government announces a consultation on the proposals in a written statement to the House of Commons, only then are details most likely to emerge.
Pension Security Risk
The government is said to be going down a dangerous path according to former Lib Dem pensions minister Steve Webb. The suggestion is that the new rules would stipulate that a company could only change their pension liabilities in an emergency. But, Mr Webb said the term emergency was “ill-defined” and that companies could create them artificially in order to reduce their pension payouts.
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