04 Jun 2024

The British Steel Pension Scheme

In May 2023, we completed our fourth buy-in with the British Steel Pension Scheme as a final step to fully insuring the scheme. The transaction secured the remaining 40% of the liabilities bringing the total insured liabilities with L&G to c.£7.5 billion. In doing so, the scheme became the largest pension scheme in the UK to have secured full insurance.

Hot steel girders in a steel mill

The trustees closed a significant deficit, which is a great outcome for members who have had their benefits fully secured much sooner than originally anticipated. The sponsoring company has removed a large historical liability from its books, enabling it to focus on its core business operations.

To insure benefits at this scale, the scheme entered a strategic partnership with us and LGIM in November 2021. Key solutions resulting from the partnership included:

  • establishing an umbrella contract, allowing the scheme to complete each transaction efficiently on pre-agreed contractual terms when pricing was attractive;
  • the ability to transfer a significant portfolio of property assets efficiently to L&G as part of premium payment; and
  • implementing a strategy to improve the scheme's funding level by aligning their investments and hedging with L&G's pricing, including the transfer of the scheme's in-house investment team to LGIM.

The power of partnerships

Man talking into a microphone in a studio

Initial £0.5 billion buy-in, strategic partnership established between trustees, LGAS and LGIM, and umbrella contract set up.

£2.3 billion transaction completed under the umbrella contract

LGIM appointed to manage the assets of the scheme, matching the investment and hedging approach to L&G's pricing.

A further £2.0 billion secured.

Final transaction of £2.7 billion.