The deficit at the British Steel Pension Scheme, Glasgow, Scotland, decreased 84% to £90 million ($149.7 million) over the three years ended March 31, 2014, according to its latest triennial valuation.
The £14 billion pension fund's deficit at its last triennial valuation, as of March 31, 2011, was £553 million, according to pension fund documents.
According to a statement on the pension fund's website, the reduction in deficit is a result of measures agreed between the pension fund trustee and the sponsoring employer, Tata Steel U.K. Ltd., “to improve the employer covenant and benefit changes implemented following consultation between the company and its employees and their representatives.”
The remaining shortfall will be addressed by deficit recovery payments through March 31, 2018, said the statement.
“The trustee believes that the agreement reached in connection with the valuation represents a positive and balanced outcome for the scheme at a particularly challenging time for the U.K. steel industry,” said Allan Johnston, chairman of the trustee board, in the statement.
In reducing its deficit, British Steel has “bucked” a trend of increasing deficits due to weak asset returns and low company contributions, said Darren Redmayne, head of Lincoln Pensions, a pension advisory firm, in a comment in reaction to the valuation. “How? By reducing the size of its liabilities through a deal struck with the unions, which reduced pensionable benefits. While other schemes may take note, it is not a path to deficit reduction many would ideally wish to follow.”
Spokesmen for the pension scheme and Tata Steel could not be reached for comment for further details.
