London: Facing with USD 3 billion shortfall in pension funds in UK operations, Tata Steel on Friday said that any industrial action against its proposed changes in the pension scheme will be "self-defeating" and will "jeopardies" a sustainable business in country.
Tata Steel Europe CEO Karl Koehler in an open letter to employees urged them to refrain from voting for an industrial action amid unions showing no signs of backing down from their demands against the firm's proposal to close British Steel Pension Scheme (BSPS).
As per trade unions, at present, the workers can retire at 60 years without an actuarial reduction.
"The company's view is that they should now work until the age of 65 for a full pension. If they were to retire at age 60 then, they would lose 5 percent for each year of early retirement - 25 percent in total," they said earlier.
The development comes close on the heels of Tata Steel's employees in the UK, who are part of various trade unions, are casting a vote to decide whether industrial action -- usually a strike or shutdown -- should be started against it.
"We have to change the pension scheme in order to deal with a shortfall as high as GBP 2 billion (about USD 3.1 billion) which is not sustainable and which would damage the long-term prospects of our company in the UK," Koehler said.
If such an action in approved by the employees it would be the first national industrial action in the industry in the last three decades. The action will be based on the majority vote of an estimated 17,000 employees.
Kohehler said, "I understand and recognise colleagues' frustrations at this situation. But I would ask them not to support industrial action to retain unaffordable early retirement benefits. Ultimately, such action would be self-defeating and would jeopardies our efforts to build a sustainable business in the UK."
Explaining that the rationale behind the letter was to make one thing absolutely clear as "sometimes the real facts can get lost", Chief Executive said, "The past few years have seen the UK and most of the world go through the worst financial crisis for generations. One of the consequences has been record low interest rates.
"And like savings in the bank, our pension scheme?s assets have not been growing fast enough to keep up with increases in the expected cost of providing benefits. The result has been a huge shortfall of up to 2 billion pounds which is clearly not sustainable."
He said, "We are still facing very difficult business conditions in the UK. Indeed our UK operations as a whole are still losing money and we will need further significant investments from Tata Steel if we are to build a sustainable business here."
Kohelher said the changes proposed to UK pension scheme will help protect benefits the colleagues have already earned.
