Is this a problem with a solution?

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.

6 thoughts on “Is this a problem with a solution?”

  1. 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.

  2. 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.

  3. 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?

  4. 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.

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