Tata Steel UK on Friday said it has signed the documentation for a Regulated Apportionment Arrangement (RAA) with the trustee of the British Steel Pension Scheme, offering more "sustainable outcomes for pensioners, employees and the business".
When the arrangement takes effect, the British Steel Pension Scheme will be separated from the steel maker and a number of affiliated companies, it said in a statement.
This announcement came after the key commercial terms of a RAA had been agreed in principle between the steel producer and the trustee of the British Steel Pension Scheme.
"Consequent to the signing of the documentation, the Pensions Regulator has issued a determination notice and a clearance statement in response to Tata Steel's application for clearance and approval in respect of the RAA," the statement said.
"This has resulted in the commencement of a 28-day period, during which directly affected parties by the RAA may refer the decision to approve the RAA before a tribunal of the UK court system called the Upper Tribunal."
Meanwhile the Pension Protection Fund has issued "confirmation of non-objection to the RAA".
At the end of that period, and in the absence of any referrals, it is expected that the regulator will confirm its approval of the RAA, which would take effect after the steel maker makes a payment of 550 million pounds to the British Steel Pension Scheme.
Tata Steel's Group Executive Director Koushik Chatterjee said that considering the continued challenges in the global steel industry as well as the uncertain global politico-economic environment, the RAA presents the best possible structural outcome for the members of the British Steel Pension Scheme and for its Britain business.
"The RAA is one important milestone in company's journey towards a sustainable and enduring future, with pension obligations, whose risk profile would be consistent with the underlying business. The net financial impact of the RAA including the payment of the agreed amount would be reflected in the Q2 FY'18 financials for the company," he said.