Boost for former Corby steelworkers after pension buy-in

Some former Corby steelworkers may receive better pension benefits after a £2bn insurance buy-in was agreed.

The Old British Steel Pension Scheme (OBSPS) is expected to exit its Pension Protection Fund (PPF) assessment period, which it has been in since 2018, and secure a full buy-out after a deal was done with insurer Pension Insurance Corporation plc (PIC).

It means that by the end of next year members could received benefits which are better than PPF levels of compensation.

The OBSPS was set up to provide pension and death benefits to UK steelworkers after the privatisation of the British steel industry, with Tata Steel UK Limited its principal employer.

But when Tata needed to set up a "transformation plan" to avoid insolvency it put forward a proposal to separate itself from the pension scheme in a regulated apportionment arrangement.

As part of the arrangement members of the pension scheme were given two options - to remain in the scheme on PPF compensation levels or transfer to the New British Steel Pension Scheme, which provided benefits in excess of PPF compensation for most members but less than full scheme benefits and had Tata as its principal employer.

About 31,000 people, including many from Corby - although officials could not release the exact figure - chose to stay in the old scheme or stayed there by default because they did not respond.

And after the £2bn deal, which was completed on October 8 and announced this morning (Thursday), the OBSPS is expected to exit its PPF period and secure a full buy-out next year.

It means members' benefits have now been secured at or above their current PPF levels of compensation with PIC, although the exact outcome for each member will not be known until the buy-out occurs. This is expected to happen towards the end of 2021. The scheme will remain in the PPF assessment period until then.

A spokesman for steelworkers' union Community said: “This is welcome news as it means many scheme members should be better off than they would otherwise have been in the PPF.

"The buy-in supports what the trade unions have always said, that the BSPS was a well-funded scheme that could not be allowed to collapse into the PPF.

"We look forward to working with the trustee to ensure that scheme members get maximum benefit from the scheme’s assets."

The announcement that Corby's British Steel plant would close was made in May 1979.

In total more than 10,000 workers were made redundant the following year.

Jonathan Hazlett, managing director of Open Trustees which has been the trustee of the OBSPS, said: "We are delighted to have entered into this buy-in policy with PIC.

"This transaction will eventually see OBSPS members receive benefits either at the same PPF level as those currently provided or, for many members, an uplift above that amount."

Rosie Fantom, a partner at Barnett Waddingham which led the transaction, said: “This is a significant step in what has been a long journey for OBSPS members, who now have the certainty that their benefits have been secured with an insurer on very favourable pricing terms in a turbulent market.

Uzma Nazir, head of origination structuring at PIC, said: “This is a significant transaction, guaranteeing the benefits of the more than 30,000 pension scheme members who have faced a long period of uncertainty about the level of their benefits, and providing many with an uplift over PPF levels."

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