Tata Steel Ltd. unit Tata Steel UK signed a deal with the trustee of the British Steel Pension Scheme that will allow the scheme to separate from the U.K. unit and certain affiliated companies.
Under a Regulated Apportionment Arrangement, or RAA, Tata Steel will contribute £550 million and a 33% stake in Tata Steel UK to the pension scheme trustee in order to separate from the scheme.
Existing pension members will be able to transfer to a new pension scheme or remain in the existing one, which will be transferred to the Pension Protection Fund.
Group Executive Director Koushik Chatterjee said, "Considering the continued challenges in the global steel industry as well as the uncertain global politico-economic environment, the RAA represents the best possible structural outcome for the members of the British Steel Pension Scheme and for the Tata Steel UK business."
He noted that the impact of the RAA would be reflected in results for the second quarter of the company's fiscal 2018.
Tata Steel closed the sale of its steel pipe mills in Hartlepool, U.K., to Liberty House earlier this month.
Talks with ThyssenKrupp AG on a joint venture have been negatively impacted by Tata's U.K. pension deficit, among other factors.