Tata Steel shares surge 3% as firm settles UK pension fund liability

NEW DELHI: Shares of Tata Steel jumped 3 per cent on Tuesday after the steelmaker finally concluded separation of the British Steel Pension Scheme (BSPS) from Tata Steel UK, with the latter receiving all approvals for its Regulated Apportionment Agreement (RAA) from the pensions regulator.

As part of the RAA, Tatas had to make a payment of £550 million and offer a 33 per cent stake in Tata Steel UK to BSPS Trustees, ET reported. It is significant since it frees Tata Steel UK and its affiliate companies from £15 billion of pension liabilities and brightens up the prospects for the future of Tata group's steel business in the UK , including a possible merger with Thyssenkrupp, the report added.

Following the report, the stock rose 3.30 per cent to end the session at Rs 683.15 on BSE. Net financial impact of RAA, including payment of the agreed amount, would be reflected in the Q2 FY18 company financials. It is widely believed that Monday’s development will clear much of the hurdles along Tata Steel’s way in planning an enduring future in UK, including the potential merger with Thyssenkrupp, the ET report said.