In an announcement, the Indian steelmaker said it will close the British Steel Pension Scheme to accruals on 31 March and will instead help employees save enroll for retirement through a defined contribution plan.  
 
The decision comes as Tata looks for a path forward for its U.K.-based strip operation, which includes the integrated Port Talbot works. The company has been discussing a potential a combination with thyssenkrupp's steelmaking business. However, Tata's U.K. pension liabilities been a stumbling block, and the company has been looking to separate itself entirely from the pension fund. 

"Tata Steel U.K. continues to be deeply engaged with the pension scheme trustee, the trade unions and relevant regulatory and government bodies to identify the best prospects for the future sustainability of its U.K. operations and a fair and practical outcome for the members of the British Steel Pension Scheme. 

The company believes that finding a structural solution to address the risks from the pension scheme to the viability of the business is a crucial part of its ongoing U.K. transformation plan," the company said in a statement.   

Closing the fund is a step toward addressing those risks.  

“The pension was the thorn in the flesh for Tata Steel and the deal was not happening,’’ A.K. Prabhakar, head of research at IDBI Capital Market Services Ltd., told the Bloomberg news service.  “Now if the scheme is taken care of, then it becomes easy to disinvest that portion.”

Although Tata intends to freeze the pension plan, the decision requires approval from the U.K. pension regulator, and there is no certainty it will be given the OK, reports India's Business Standard newspaper. 

“It is not going to be easy for the Tatas to convince the regulator. Hefty compensation will have to be paid,” Harish Patel, a national officer the trade union Unite, told the newspaper.