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British Steel slashes pension deficit by more than 80% since March 31

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The deficit of the British Steel Pension Scheme, London has fallen more than 80% over seven months, to around £50 million ($61 million) as of Oct. 17, said a statement provided by a spokeswoman.

The pension fund's actuary had indicated a £300 million deficit as of March 31. A year earlier, as of March 31, 2015, the deficit was £485 million. The reduction in the deficit is due to recent increases in yields, which has led to a lower decrease in assets of the pension fund vs. its liabilities, said the statement.

The £13.3 billion pension fund — one of the largest defined benefit funds in the U.K. — has been the focus of a consultation by the U.K. government, looking at ways to help save the fund. The fund's sponsoring employer is Tata Steel U.K., a subsidiary of Tata Steel Ltd. The firm launched a process to sell the U.K. business in April.

“However, if Tata Steel U.K. is no longer able to access additional capital from the wider Tata Steel Group for continuation of business, a different valuation basis would have to be adopted and the deficit would be considerably higher. This is the main reason that the trustee considers that benefits need to be modified,” said the statement. Further details were not provided.

At the time of the government consultation launch in May, it cited December 2015 figures showing that the fund was running a £700 million deficit.

The statement added that the pension fund “has been well positioned for what has been happening in bond and currency markets in recent months, and has taken the opportunity to lock in gains from equity investments,” particularly overseas equities. The result has been that the fund “still has more than enough assets to provide modified benefits on a low-risk, cashflow matching basis — indeed the funding buffer has grown — with substantially reduced risk.”

The government accepted comments on its proposals, which include regulatory changes, until June 23. It is analyzing feedback, said a notice on its website.