Tata Steel UK's deficit in pension scheme stands at $138 mn

London: Tata Steel Wednesday said that its UK arm has concluded the actuarial valuation of British Steel Pension Scheme (BSPS) and the deficit in the scheme stands at about 90 million pound (around USD 138 million) as of March 2014.

The residual deficit of Tata Steel UK Ltd (TSUK), an indirect subsidiary of Tata Steel, stood at around 550 million pound (over USD 842 million) for the period ended March 31, 2011.

Trustee of BSPS and TSUK have concluded the triennial actuarial valuation of the scheme as of March 31, 2014, it said in a regulatory filing.

"As a result of measures agreed between the Trustee and TSUK and benefit changes implemented following consultation between TSUK, its employees and their representatives, the on-going residual deficit has been reduced from around 550 million pound as on March 31, 2011 to 90 million pound as on March 31, 2014," it added.

Reacting to the news, Tata Steel scrips today rose 4.25 percent to settle at Rs 236.80 per share at the BSE.

Accounting impacts arising from the changes to the pension plan will be recorded in the company's accounts in due course, the filing said.

BSPS is the largest defined benefit scheme within Tata Steel Europe's portfolio. On account of low interest rates in the UK, the valuation placed on the scheme's liabilities increased significantly since the last actuarial valuation in 2011 leading to a greatly increased funding deficit.

Tata Steel negotiated with the employees and unions on making certain changes to the pension scheme, which the firm claimed will make it affordable and sustainable and at he same time will provide competitive benefits to the workers.

In June this year, unions -- Community, Unite, Ucatt and GMB -- had threatened to initiate industrial action at Tata Steel, the first such action in the UK's history in over three decades.

However, the unions suspended their strike after the Indian steel giant agreed to retain a modified final salary pension scheme.

Tata Steel had argued that reforms to the BSPS, which has around 135,000 members and a deficit of more than 2 billion pound, are vital if the company is to return to profitability.