Question 1: Would existing regulatory levers be sufficient to achieve a good outcome for all concerned?

There are sufficient regulatory levers (and tight controls) that would enable Tata Steel to separate itself from the BSPS, subject to approval by the Pensions Regulator.  It would not, however, be possible for the BSPS to continue to be run on with reduced scheme benefits and retain PPF protection unless it is able to secure ongoing financial support from a business that can credibly support the scheme.

We would note, however, that it is not possible to achieve a “good outcome for all concerned”.  To the extent that the members of the BSPS receive benefits in excess of those that can be provided by the scheme or which would be provided by the PPF in the event of insolvency, other employers will ultimately need to underwrite this.  There can be no outcome where everyone wins.

Question 2: Is it appropriate to make modifications of this type to members’ benefits in order to improve the sustainability of a pension scheme?

We would support the ability of employers, trustees and scheme members to agree changes in scheme benefits that would improve the sustainability of the scheme.  For practical purposes, we propose that any changes would need formal approval by the Pensions Regulator as well as support from the trustees and at least 75% of all affected members.

Question 3: Is there a case for disapplying the section 67 subsisting rights provisions for the BSPS in order to allow the scheme to reduce indexation and revaluation if it means that most (but not all) members would receive more than PPF levels of compensation?

As noted above, we do not believe that the case has been made to exclude members entirely from any decision in relation to their accrued benefits.  So while we agree that obtaining consent from all members to any adverse retrospective change as required by section 67 is not practical, we do not believe that it follows that members should be excluded entirely from any decision on their pension benefits.  We would support an amendment to section 67 that enables schemes to implement changes subject to at least 75% of members consenting to the change and subject to the approval of the Pensions Regulator.

Question 4: Is there a case for making regulatory changes to allow trustees to transfer scheme members into a new successor scheme with reduced benefit entitlement without consent, in order to ensure they would receive better than PPF level benefits?

We believe that if the principle of allowing members to agree a variation in their benefits by 75% majority vote is accepted, there would be no need to derive an artificial method of achieving the same aims (i.e. a bulk transfer to a new pension scheme without member consent).

Question 5: How would a new scheme best be run and governed?

Any new scheme will either need to have a financially secure sponsor or will need to forgo PPF protection.  We do not think that it is reasonable to expose other scheme sponsors to the risk of having to underwrite any new scheme through increased PPF levies if the scheme is allowed to run on without a strong scheme sponsor.

Given that it is unlikely that a new sponsor will come forward to take responsibility for the scheme, it will be important to ensure that the scheme is very well run and governed recognising that there is no PPF protection available to it.

Question 6: How might the Government best ensure that any surplus is used in the best interest of the scheme’s members?

As noted above, we do not support continued PPF protection for any new scheme unless it is supported by a strong scheme sponsor.  On the basis that the new scheme is not eligible for PPF protection, the use of surplus will be a matter for the trustees as they see fit.

Question 7: What conditions need to be met to ensure that regulations achieve the objective of allowing TSUK to reduce the levels of indexation and revaluation payable on future payment of accrued pension in the BSPS without the need for member consent, balancing the need to ensure that member’s rights are not unduly compromised?

In our view, it should be a condition of this outcome that Tata Steel (and other Tata Steel companies) continue to support the pension scheme after the restructuring.  We would also support the need for member consent (say 75% majority by number) prior to any adverse retrospective change in member benefits and for the overall arrangement to be subject to approval by the Pensions Regulator.

Question 8: What conditions need to be met to ensure that regulations achieve the objective of allowing trustees to transfer members to a new scheme without the need for member consent, balancing the need to ensure that members’ rights are not unduly compromised?