A SERIES of changes to pension law are being considered by the UK Government as part of efforts to rescue the steel industry in Wales and across Britain.

It is hoped the move could save £2.5bn, but some have said the plans could see benefits for pension holders cut.

A consultation has been launched into the changes, which include tying the British Steel Pension Scheme to the Consumer Price Index rather than the higher Retail Price Index.

Tata Steel, which is currently in the process of selling its entire UK operation, including plants in Llanwern, Caerphilly, Port Talbot and across the UK, has welcomed the news.

Human resources director for the firm’s European operations Tor Farquhar said: “This is an important step forward which would enable a better outcome for the vast majority of members of the British Steel Pension Scheme than the benefits provided by the Pension Protection Fund."

Chairman of the scheme’s board of trustees Allan Johnston added: "Although this would entail future pension increases being cut back from their current levels, benefits would be more generous than those provided by the Pension Protection Fund for the vast majority of scheme members,” he said.

"The primary focus of the trustees is to secure the best outcome for scheme members.”

But shadow business secretary Angela Eagle said she believed the idea "risks setting a very worrying precedent".

And former Liberal Democrat pensions minister Steve Webb warned the government was "going down a very dangerous path".

Mr Webb, who is currently director of policy at pensions firm Royal London, said: "A deal on Tata must not create a precedent or a loophole which could be exploited by firms keen to walk away from their pension liabilities.

Speaking in Parliament today, business secretary Sajid Javid said members of the pension scheme would be "better off or no worse off" under the plans.

"I think one of the first important points to make is that it's the scheme's trustees that have come forward and asked us to look at current legislation because they believe it would lead to better outcomes for their members," he said.

"So this is a product of the scheme trustees approaching us directly.

"Under the scheme's current rules they do have the ability to make all of the changes that they have proposed but they are prevented, rightly so, by legislation in the 1995 Pensions Act.

"They have asked us if we would consider removing that portion of the act in the case of their scheme and their scheme only."

Chairman of the House of Commons business, innovation and skills select committee Iain Wright said he was concerned the changes "Could set a dangerous precedent whereby companies abdicate their responsibilities to the members of their pension schemes."

Mr Javid replied: "No decision has been made and as I mentioned earlier we are very wary of setting a precedent.

"I can assure you that this is very much about this scheme and this scheme only in these very unique circumstances."

The British Steel Pension Scheme has 130,000 members and currently has a deficit of about £700m.

The consultation will run until Thursday June 23. To take part visit gov.uk.