Government Warned Over Pension Cut Plans

The government has been cautioned of plans to cut pension benefits to help save Tata Steel’s UK operation that could take ministers down a precarious path.

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Steve Webb, the ex-pensions minister advised against hasty changes that could implicate workers outside the steel industry.

A £485m pension shortfall has been daunting potential buyers of Tata Steel’s UK business.

A proposal on the pension scheme’s future has been propelled forward by ministers.

The Department for Work and Pensions said: “it includes a full range of options that consider whether and how the scheme could be separated from the existing sponsoring employer and whether it will be necessary to reduce the benefits within the scheme.”

One possibility is to base the scheme’s annual upsurge on the Consumer Prices Index (CPI) inflation measure, which is typically below the Retail Prices Index (RPI) measure that is presently used.

Former Lib Dem pensions minister Steve Webb said: “The government is going down a very dangerous path.

“Everyone has huge sympathy for steel workers and for efforts to protect jobs, but rushed changes to pension rules risk driving a coach and horses through the pension security of hundreds of thousands of workers well beyond the steel industry.

“Once there’s a loophole that says you can walk away from promises you’ve made. Other [companies] could walk away.”

He also added that he thought there could also be legal challenges.

However, the plan has been supported by a number of union leaders and the British Steel Pension scheme.

 

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