The British Steel Pension Scheme (BSPS) has selected Legal & General Investment Management (LGIM) to manage the combined assets of its defined benefit (DB) scheme, while its in-house team transfer to the asset management firm.
BSPS – one of the UK’s largest pension schemes with more than 69,000 members and £9.9bn (€11.7bn) in assets – is administered by BS Pension Fund Trustee Limited, a corporate trustee company set up for this purpose.
As part of the deal, several employees of the scheme’s in-house investment manager will transfer to LGIM to support the transition, which is expected to start in the final quarter of 2022.
Keith Greenfield, chair and independent trustee director, of the scheme, said: “Leveraging the scale and expertise of LGIM will resolve a number of cost and operational risk issues and will support our strategy to secure liabilities in full with one or more insurers, and be in a position to make additional payments to members under the agreement reached when the scheme was set up.”
With regard to the staff transfers, he said: “I hope that a number of our colleagues will continue their careers and involvement with the scheme with LGIM in the future.”
Michelle Scrimgeour, LGIM’s chief executive officer, added: “Like many DB schemes, BSPS has seen its funding level against the cost of securing liabilities with an insurer improve significantly in recent months. Our role will be to manage the investments whilst closely matching insurer pricing and, in so doing, we will be leveraging the full resources of the L&G Group.”
LGIM and Legal & General Retail Investments already manage and insure just under 40% of the scheme’s assets.
According to LGIM, there is an estimated £1.6trn remaining in DB scheme assets in the UK. The Pensions Policy Institute (PPI) has estimated that £770bn could come into play in the UK buy-in and buyout market leading up to 2030.
Earllier this month the Personal Investment Management & Financial Advice Association (PIMFA) – the trade association for the wealth management, investment services and the investment and financial advice industry – called for members who were wrongly advised to transfer out of the BSPS to be transferred into the Pensions Protection Fund to ensure they were able to receive a guaranteed income which they had wrongly given up.