The UK government had proposed extending “special aid” to the British Steel Pension Scheme (BSPS).

Tata Steel, the Indian company which took over British Steel, is currently seeking a buyer for its struggling UK operations. The proposed changes were designed to grant Tata Steel UK to be sold unburdened by its pension deficit.

The scheme, which has around 130,000 members, has around £13.3 billion of assets to approximately £14bn in liabilities, assuming that there is a sponsoring employer backing it, according to UK government figures.

Proposals considered by the UK government included changing the basis of the scheme’s annual increase to the Consumer Prices Index measure of inflation, rather than the Retail Prices Index measure troublesome-wired into the rules. This would require government legislation, as it is not usually permitted to reduce the future benefits available below a pension scheme without the individual agree of a meaningful number of members.

The trustees of the scheme presented the proposals to the UK government as an alternative to placing the scheme into the Pension Protection Fund, the ‘lifeboat’ fund which provides compensation to members of defined benefit pension schemes whose employers own become insolvent and are no longer competent to pay the pensions they own promised.

The report said that the plan has been dropped in piece because Sajid Javid, formerly business secretary, has moved to a fresh role as secretary of state for communities and local government. Ministers also feared that the home of Commons would block the plan, the sources told the Financial Times. 

fresh proposals below an offer for Tata from German company ThyssenKrupp own also affected the government’s plan, the Financial Times said.