Thousands of steelworkers look set for a pension boost after an insurance company buy-out of their pension scheme.
The specialist firm Pension Insurance Corporation (PIC) has agreed a £2 billion deal to take responsibility for the retirement funds of 30,000 steelworkers.
The British Steel scheme was forced to enter the government’s Pension Protection Fund (PPF) after former owner Tata Steel restructured its business in 2017.
The pension lifeboat fund spent two years analysing the scheme and found it was in better shape than was at first thought meaning it could be taken over by any insurance firm which wished to buy it.
At or above
Once it had acquired the firm PIC said every pension would be either at or above the levels which could have been expected if they had stayed with the lifeboat fund.
A spokesman for Community, the steelworkers’ union, said: “This is welcome news as it means many scheme members should be better off than they would otherwise have been.
“The buy-in supports what the trade unions have always said, that the British Steel Pension Scheme was a well-funded scheme that could not be allowed to collapse into the PPF.”
A pensions industry spokesman it would be ‘like Christmas’ for the workers who had been expecting a lesser amount of money from the PPF.
However, the savers will not learn how much their pension pots will be worth until the deal completes at the end of next year.
The British Steel scheme dates back to 1967 and covered the employees of the former British Steel company which became Corus in the 1990s.
The business was sold to India’s Tata Steel in 2007 and most of the scheme’s 120,000 members decided to change to a new fund in 2018.
It was the older scheme which was taken over by the PPF.
Jonathan Hazlett, managing director of Open Trustees, which runs the older scheme, said: “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 had the scheme entered the PPF.
“Old British Steel Pension scheme 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.”