Tata Steel UK closes pension scheme to new accruals from March 31

LONDON (Reuters) - Tata Steel UK on Tuesday said it would close its final salary pension scheme to accruals from March 31 as a step towards resolving the future of its British operations.

The fate of Tata's British businesses, including the nation's largest steelworks at Port Talbot, has been in the air since Tata Steel said a year ago it planned to divest its British assets following heavy losses.

"Tata Steel UK 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 UK operations and a fair and practical outcome for the members of the British Steel Pension Scheme," Tata said in a statement.

Tata Steel's British workers in February voted to accept pension benefit cuts in return for safeguards on jobs and investment, although the Indian company's plan to spin off its entire British pension scheme still faces regulatory hurdles.

The scheme will be replaced by a less generous defined contribution scheme, removing one obstacle to a possible merger with Germany's ThyssenKrupp AG.

Any pensions deal could take many more months, but Tata on Monday said merger talks were continuing.

(Reporting by Barbara Lewis and Carolyn Cohn)