PIC secures Old British Steel Pension Scheme in £2 Billion PPF uplift deal

London, 22 October 2020 – Pension Insurance Corporation plc (“PIC”), 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 “Scheme” or “OBSPS”), guaranteeing 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, importantly, to enhance members’ benefits above those payable by the PPF for any members who lost out as a result of entering the PPF assessment. PIC was able to structure the transaction in a way that gave the Trustee price certainty in the current, volatile financial markets.

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.

Open Trustees Limited has been the Scheme’s Trustee since 29 March 2018. It is an independent entity but is wholly owned by international law firm, Osborne Clarke LLP. The Trustee was advised by Barnett Waddingham LLP and Hogan Lovells. PIC was advised by HSF.

Jonathan Hazlett, Managing Director of Open Trustees Ltd, said: “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.

 “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, said: “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.”

Rosie Fantom, Partner at Barnett Waddingham, said: “This is a significant step in what has been a long journey for OBSPS members, who now have the certainty that their benefits have been secured with an insurer on very favourable pricing terms in a turbulent market. Rigorous work carried out over the last two years allowed the scheme to take full advantage of bulk annuity pricing.”

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Notes to Editors:

For further information please contact:

PIC                                                     
Jeremy Apfel                                   
+44 (0)7500 860268 apfel@pensioncorporation.com

About the Pension Protection Fund (PPF):

The Pension Protection Fund (PPF) was set up in April 2005 to protect millions of people who belong to defined benefit, e.g. final salary, pension schemes in the United Kingdom. If their employers fail, and their pension schemes cannot afford to pay what they promised, the PPF will pay compensation for their lost pensions.

Around 900 pension schemes have transferred to the PPF. The schemes looked after range from those of small outfits to formerly FTSE-listed organisations. The PPF has evolved to an organisation which has over £28 billion of assets under management and is responsible for more than 235,000 members.

About Pension Insurance Corporation:

The purpose of Pension Insurance Corporation (“PIC”) plc is to pay the pensions of its current and future policyholders. PIC provides secure and stable retirement incomes through leading customer service, comprehensive risk management and excellence in asset and liability management. At half-year 2020, PIC had insured 237,600 pension scheme members and had £47.7 billion in financial investments, accumulated through the provision of tailored pension insurance buyouts and buy-ins to the trustees and sponsors of U.K. defined benefit pension schemes. Clients include FTSE 100 companies, multinationals and the public sector. PIC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority (FRN 454345). For further information please visit www.pensioncorporation.com