Corus in pensions row

By THIS IS MONEY
Updated:

 

The steelworkers' union ISTC accused British Steel on Monday of raiding hundreds of millions of pounds from its pension fund to help pay for its merger with Dutch group Hoogovens to create Corus Group.

'We will decide tomorrow whether to take this to the pensions ombudsman,' a spokesman for the Iron and Steel Trades Confederation said. 'While legally British Steel can do this, there is a question of natural justice and the ombudsman can rule on that.'

A Corus spokesman said the union was indulging in a war of numbers and was being misleading. British Steel declared a pension fund surplus of £1.bn as at March 31 and discussed it with unions.

The ISTC and other unions proposed using some of the money to help lower earners, to make a one-off £500 payment to pensioners and gradually lower the retirement age to 60 from 65.

'British Steel have now told us they are going to act unilaterally. They are taking £863m of the surplus for themselves,' the union said in a statement.

'That cash can be used to fund the merger with Hoogovens or indeed cover the £700m British Steel is giving its shareholders as part of the merger deal.

'Shareholders will be receiving their money very soon. We hope they realise where it is coming from.'

The British and Dutch companies have now merged.

A Corus spokesman said the union's sums did not add up and that the company and its employees would benefit equally from the surplus.

He said that £608m of the surplus was actually needed to maintain the fund's status quo, leaving some £400m to reallocate.

About 40 percent of this would be used to improve pension benefits and a similar amount -- some £160m, or £20m a year -- to cut its future contributions to the pension fund from five percent of the employee's salary to two percent.

The spokesman said it was ludicrous to claim Corus was using some £800m to fund its dividend payout.

- Reuter

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