On the go: The British Steel Pension Scheme has signed a £2bn buy-in with Legal & General, bringing the total liabilities insured to around 60 per cent.
The transaction, covering some 30 per cent of the defined benefit scheme liabilities, was made possible due to its accounting surplus, which “has been ‘utilized’ to secure insurance for the scheme”, according to a statement from Tata Steel.
The previous buy-ins, also with Legal & General, were agreed in November 2021 and May 2022, covering 5 per cent and 25 per cent of liabilities respectively, totalling about £2.8bn.
As of March 31 2022, BSPS had a funding level of 108.8 per cent, up from 105 per cent a year before.
Tata Steel added that during the period of unprecedented interest rate volatility in September-October, the BSPS funding level “actually improved, and it had sufficient collateral to maintain its interest rate and inflation hedges”.
“Overall, the scheme continues to have a healthy surplus and its risk position has improved since its restructuring in 2018, and quarter-on-quarter,” it added.
The new scheme was set up in 2018 as a result of a regulated apportionment arrangement approved by the Pensions Regulator.
A residual buy-in for the remaining 40 per cent of the scheme’s liabilities is expected to be completed in the first half of 2023, depending on market conditions, Tata Steel noted.
