Tata Steel Expects to Complete British Steel Pension Buy-In by Mid-2023

The British Steel Pension Scheme’s has secured a third buy-in policy with Legal & General Group plc, under which approximately £2 billion ($2.5 billion), or 30% of its liabilities, were insured. The move increases the total amount insured to approximately 60%, and Tata Steel Limited announced it expects to complete a buy-in for the remaining 40% during the first half of the year.

The BSPS, one of the largest pension plans in the U.K., is an independent fund managed by its own board of trustees. It has more than 69,000 members and approximately £9.9 billion in assets. The plan entered assessment in 2018 under U.K. pension lifeboat the Pension Protection Fund after the restructuring of Tata Steel UK Limited. PPF assessment occurs when the sponsoring employer of an eligible pension plan becomes insolvent.

In July 2022, Legal and General Investment Management was appointed to manage the combined assets of the BSPS defined benefit plan. The BSPS trustee previously entered into buy-in policies with Legal & General in May 2022 and November of 2021, insuring 5% and 25% of liabilities, respectively, for a total of approximately £2.8 billion.

“With full insurance buy-in completed, the scheme and, in turn, Tata Steel UK, will be fully covered against any funding shortfalls arising from changes in underlying conditions or market variables in future,” Tata Steel’s release said.

As of September 30, 2022, the British Steel pension represented a net surplus of approximately £1.5 billion on its balance sheet, according to the announcement. Also, the company, said that in September and October, when the U.K. experienced unprecedented interest rate volatility, the funding level for the British Steel pension actually improved, and it had sufficient collateral to maintain its interest rate and inflation hedges.

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“Overall, the scheme continues to have a healthy surplus, and its risk position has improved since its restructuring in 2018, and quarter-on-quarter,” the Tata release said.

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Tags: British Steel Pension Scheme, buy-in, Legal & General Investment Management (LGIM), Liabilities, Tata Steel, trustees

Norges Bank Investment Management, which manages Norway’s $1.4 trillion Norwegian Government Pension Fund Global, has acquired a 49% stake in a nearly 1.3 gigawatt portfolio of solar plants and onshore wind farms in Spain operated and co-owned by renewable energy firm Iberdrola.

The sovereign wealth fund’s manager will pay 600 million euros ($650.6 million) for the stake, which values the total portfolio at approximately 1.2 billion euros. Iberdrola, which maintains a 51% majority, will continue to control and manage the assets, also providing operations and maintenance services, as well as other corporate services.

The portfolio is made up of seven solar plant projects and five onshore wind projects that have an installed capacity of 1,265 megawatts. Solar plants account for 80% of the portfolio, while onshore wind makes up the other 20%. Nine of the projects are currently being developed and are expected to be completed between 2023 and 2025. Norges Bank Investment Management will assume ownership of the projects once they become operational.

Of the 1.265 GW total capacity, 137 MW are currently operational in the Castilla-La Mancha and Aragón regions of Spain. The rest of the projects that are still being developed are in Andalusia (358 MW), Extremadura (343 MW), Aragón (175 MW), Castilla y León (102 MW), Madrid (55 MW), Murcia (50 MW) and Castilla-La Mancha (45 MW). Iberdrola announced the portfolio will have the capacity to supply electricity to more than 700,000 homes each year.

NBIM, which is the world’s largest investor in global equities and has stakes in more than 9,000 companies, owns more than 3% of Iberdrola. Iberdrola said its partnership with the Norwegian firm could be extended to additional renewable energy opportunities in other markets.

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