The British Steel Pension Scheme (BSPS) has agreed a £2.7bn buy-in with Legal & General (L&G), the fourth and final buy-in for the scheme, making it the largest scheme in the UK to have secured full insurance.

The transaction covers the remaining 40 per cent of the scheme’s liabilities, meaning that L&G has now insured £7.5bn of the scheme’s liabilities, securing the benefits of all 67,000 retired and deferred members.

Following the latest buy-in, the scheme has also reached a funding level that will allow the trustee to make additional payments to members under the agreement reached when the scheme was set up.

The deal follows three previous buy-in deals with L&G, with an umbrella contract set up in 2021 that allowed the scheme trustee to complete each transaction quickly and easily on pre-agreed contractual terms.

The trustees were advised on all four buy-in transactions by LCP and received legal advice from Travers Smith.

The sponsor, Tata Steel UK Limited, was advised on the transactions by Mercer and Slaughter and May, while L&G received legal advice from CMS Cameron McKenna Nabarro Olswang LLP.

Commenting on the deal, BSPS independent trustee director and chairman, Keith Greenfield, stated: “Since the new scheme was established, the trustee’s overall objective has been to reach full funding on a solvency or 'buyout' basis. There were two reasons for this.

"Firstly, it provides members with the greatest possible comfort that benefits will be paid in full as and when they fall due. Secondly, achieving this objective allows us to make additional payments to members under the agreement reached when the new BSPS was set up.

“I would like to thank my fellow trustee directors, scheme officers and advisers and counterparts in Tata Steel and L&G for working together in partnership to deliver this outcome many years earlier than expected when the new scheme was set up.”

L&G Retirement Institutional CEO, Andrew Kail, added: “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.”

Adding to this, Mercer risk transfer partner, Ben Stone, pointed to the "final landmark transaction", in combination with the previous transactions, as demonstration of the power of working closely with one insurer over a period of time.

"The trustees, scheme sponsor and insurer have been able to collaborate in a focussed and innovative environment to achieve a result which meets all parties’ objectives," he continued.

“Other large pension schemes may observe the outcome of this successful process and may consider the potential advantages of working with a single insurer.

"In an increasingly busy market this ability for schemes to be seen as a favoured partner by insurers could be the marginal gain required to achieve their insurance objectives.”

This was echoed by LCP partner and head of its buy-in practice, Clive Wellsteed, who highlighted the deal as proof that, when structured in the right way for the right scheme, the strategic partnership route can add value beyond what can be delivered by a more traditional process.

“At the heart of this series of four transactions was a deep and unique partnership carefully curated between the trustee and L&G,” he continued.

“The design of the partnership was central to its success, delivering exceptional pricing and the unique ability to transfer a significant portfolio of property to L&G, alongside close co-ordination of asset and data preparation to optimise investment synergies and due diligence.”

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