Some 11,000 direct employees’ jobs are at risk if no buyer is found, along with at least twice that number in the supply chain.
Tata has said that the 133,000-member pension fund attached to its UK steel business has assets of £14bn with a funding deficit of £485m.
Not really sure it is to be honest. To cover that hole each of those 11k people has to generate £44k to put into the pension fund.
Hmm.
Yes. You reduce the liabilities per head by 44K to reduce the deficit. That’s not that much over a retirement period of say 25 years. It’s how the pension protection scheme works.
Tim, it’s £44k over the remainder of their employment from now until retirement. So not as bad as first glance.
The simpler alternative is to allow the pension scheme to earn a decentrate of return on its investments a 1% real return on gilt-edged would wipe out that deficit in a year or two.
assets of £14bn
I wonder what those assets are, and whether they really are worth £14bn? Could any of them be large, obsolete chunks of machinery bolted to a concrete floor in Port Talbot, worth book-value while the plant is running but fuck all if not?
Tim,
In that case the pension fund trustees need to be shot.
From these comments it almost appears that Tata has a liquidity problem. When looked at in just those terms I don’t see the difference in bailing out the steel mill or a bank with a bunch of bad loans.
Does anyone have reliable information on other costs a plant in Wales faces that don’t exist in China?
The two items that I am concerned about are environment and work place safety regulations. Any other cost comparisons might also be useful. Articles like this Fortune piece never seem to contain what I am most interested in.
I should add I have a good idea of the labor component.