Tata Steel to end benefit schemes for employees in UK

MUMBAI: Tata Steel will close the defined benefit schemes it offers to employees in the UK as part of a reworked compensation framework for new recruits and is also planning to limit the contribution rate for existing members to manage pension risks.

According to people familiar with the development, the move is aimed at new employees of Tata Steel Europe and is being done to protect the company in the event of any unfavourable market changes.

"The market value of Tata Steel Europe's net pension assets substantially exceed the net assets. If there is any adverse change, it can have a material impact on financial statements as well as on the level of company pension contributions," Tata Steel said recently.

The company didn't respond to queries on the issue. Defined benefits are typically a category of pension plans where the employer promises a specified monthly benefit on retirement that is prepared using the employee's earnings history, tenure of service and age.