The British Steel Pension Scheme (BSPS) has a £700 million deficit. Firms say they might snap up Tata’s steel works on the cheap, but not at a cost of bailing out the pension fund.
The Tories first looked at taking BSPS into the state-backed PPF pension scheme. But this would come with a cut of more than ten percent for many workers.
Now business secretary Sajid Javid proposes a law change so BSPS pensions can rise in line with the CPI inflation rate not the RPI rate. CPI is typically around 1 percentage point lower.
Workers would lose about £2.5 billion.
The fear of job losses must not be used as cover for, as steel unions put it in a joint statement, “employers dodging their pensions responsibilities”.