Legal & General has announced a £2.7 billion buy-in with the British Steel Pension Scheme, its final step to fully insure the £7.5 billion scheme which includes the benefits of 67,000 retired and deferred members.
This is the fourth and final bulk annuity transaction between BSPS and L&G, which follows a previous transaction made in November 2021.
Through a series of phased buy-ins over this 18-month period, the scheme has now insured all its liabilities with L&G and has become the largest scheme in the UK to have secured full insurance.
The completion of the transaction means the scheme has now reached a sufficient funding level which will enable the trustee to make additional restoration payments to members under the agreement reached when the scheme was first established.
To insure benefits at this scale, L&G worked in partnership with the trustees, the scheme’s in-house teams and advisors, as well as the sponsoring company Tata Steel UK.
As part of the collaboration, L&G agreed an umbrella contract with the trustees in 2021, which enabled the parties to complete each transaction quickly and easily on pre-agreed terms.
It also saw the scheme’s in-house investment management transfer to L&G Investment Management (LGIM) in 2022 to implement a strategy to improve the scheme’s funding level by aligning investments with L&G’s pricing.
The umbrella contract enabled the scheme to take advantage of an uncertain market and secure pricing to achieve the trustee’s and sponsor’s target of full insurance.
Andrew Kail, CEO, Legal & General Retirement Institutional (LGRI), said: “We are extremely proud of the work that we have done with the scheme over the past two years. This is a great result not only for the trustees and sponsor but also for members.
“These kinds of outcomes are only achieved with the hard work and support of a wide group of people following a carefully considered and well executed plan. By working in partnership with the trustees and sponsor to bring together expertise across L&G, we secured all members’ benefits far faster than initially anticipated.”
The trustees were advised on the insurance strategy and execution of all four buy-in transactions by Lane Clark & Peacock (LCP) and legal advice was provided by Travers Smith.
The sponsor was advised on the transactions by Mercer and Slaughter and May. CMS Cameron McKenna Nabarro Olswang LLP provided legal advice to Legal & General.