Giant insurer in S$26 billion British Steel Pension Scheme bid – report

Significant issues face deal which also involves Indian multinational

Giant insurer in S$26 billion British Steel Pension Scheme bid – report

Insurance News

By Paolo Taruc

Insurance giant Legal & General and Indian multinational Tata Steel are reportedly in talks about a buyout of the £15 billion (approximately S$26 billion) British Steel Pension Scheme.

Trustees of the scheme were approached by the insurer about taking over some, or all, liabilities, The Sunday Times reported. The scheme is seen as roadblock in Tata Steel’s bid to merge with the steel operations of German company Thyssenkrupp.

Tata Steel acquired the scheme in 2007 as part of the £6.2 billion acquisition of Anglo-Dutch steelmaker Corus, City A.M. reported. The scheme has approximately 130,000 members and a deficit of about £5 billion on a buyout basis.

When sought for comment, Legal & General told The Sunday Times that a buyout of the British Steel Pension Scheme is not something it’s actively working on at this time.

Earlier this year, The Pensions Regulator warned about “significant issues” to be resolved regarding the scheme, according to The Guardian. But a statement released last week by the government office said “good progress is being made” with its discussions with Tata Steel and the trustees about the future of the scheme.

“The key commercial terms of a regulated apportionment arrangement (RAA) have been agreed in principle between the company and the BSPS trustee. These appear to be in line with our published principles. However, there are still important details to be finalised before we are in a position to approve the RAA and we are considering these carefully in light of their impact upon the 130,000 pension scheme members and PPF [Pension Protection Fund] levy payers.”

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