Pension Insurance Corporation, a specialist insurer of defined benefit pension funds, has signed a £2 billion pension insurance buyout with the trustee of the Old British Steel Pension Scheme.
The deal secures future pension payments for all of the more than 30,000 members at, or above, PPF levels of compensation.
The scheme entered PPF assessment in 2018 following the restructuring of Tata Steel UK Limited.
PIC worked closely with the Trustee to establish that the Scheme had sufficient funds to support a buyout of the Scheme and to enhance members’ benefits above those payable by the PPF for any members who lost out as a result of entering the PPF assessment.
The scheme will now go through a period of reconciling member benefits and calculating uplifts where applicable, whilst the overall benefits are guaranteed by PIC within a buy-in structure.
The process is expected to complete towards the end of 2021, when the members will come out of the PPF and become direct PIC policyholders.
“We are delighted to have entered into this buy-in policy with PIC. This transaction will eventually see OBSPS members receive benefits either at the same PPF level as those currently provided or, for many members, an uplift above that amount,” said Jonathan Hazlett, Managing Director of Open Trustees Ltd.
“It has been difficult for the OBSPS members over the last few years. Whilst the PPF provides a valuable safety net and a significant level of protection, many members will now receive higher benefits than they might otherwise have expected. OBSPS members can take comfort that their benefits will be looked after by an insurer which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority, as well as being committed to the highest levels of customer service.”
Uzma Nazir, Head of Origination Structuring at PIC, added, “This is a significant transaction, guaranteeing the benefits of the more than 30,000 pension scheme members who have faced a long period of uncertainty about the level of their benefits, and providing many with an uplift over PPF levels.
“We are delighted to have been able to work so closely with the Trustee and Barnett Waddingham and ultimately deliver what was required in the biggest and most significant transaction of the year.”
