Tata Steel, the Indian conglomerate whose large British pension fund has been at the centre of talks over the future of its troubled United Kingdom business, has agreed a deal with regulators to offload the scheme.
The company said that the Pensions Regulator has issued a clearance statement in response to Tata Steel's application for clearance and approval in respect of the RAA.
The terms of a new pension scheme, have also been agreed, to which members of the existing one would be invited to transfer, following the RAA, which would have lower future annual increases for pensioners and deferred members, posing "significantly less risk" for TSUK.
This follows an announcement on May 16 that the key commercial terms of the RAA had been agreed in principle between the company and the pension scheme trustee. Members who opted against transferring would be moved with the old scheme to the Pension Protection Fund, created to protect members should their pension fund become insolvent.
Koushik Chatterjee, Tata Steel's Group Executive Director, said the RAA process has been a long and detailed one, and thanked everyone involved, including the United Kingdom and Welsh governments, for their constructive engagement through the process.
The Pensions Regulator (TPR) confirmed it had given the green light to the Tata Steel proposal to restructure the BSPS, preventing the company from becoming insolvent.
A PPF spokesman said: "Members of the British Steel Pension Scheme will have seen a lot of speculation about the future of their pensions, so we want to reassure them the PPF is there to protect them throughout this process".
While it seperates the old pension from Tata Steel the company is sponsoring a new pension scheme for its workers.
The deal also addressed one obstacle to a proposed merger between Tata's British businesses and Germany's Thyssenkrupp.
Unions welcomed the agreement, saying it helped end members' uncertainty about their retirement income.
Fate of the Tatas' British businesses, including the UK's largest steelworks at Port Talbot in Wales, was thrown into uncertainty after Tata Steel said more than a year ago it planned to sell British assets following heavy losses.
However, the modified benefits offered by the new BSPS are expected to be better than PPF compensation for the vast majority of current pensioners and for many other members.
Lesley Titcomb, chief executive of the regulator, said: "We do not agree to these types of arrangements lightly but after several months of robust negotiations in this case, we believe that it is the best possible outcome for everyone involved in what is a very hard situation. We'd encourage members to consider the details and their position carefully and decide whether the new scheme or the PPF is the better option for them".