After nine years of lawsuits following the collapse of its sponsor, the UK pension scheme of Canadian telecoms company Nortel Networks has signed a £2.4bn (€2.7bn) buyout deal with Legal & General and finally ended its long assessment period in the Pension Protection Fund (PPF).

Legal & General today said it had completed the buyout for the Nortel Networks UK Pension Plan, which covers some 15,500 pensioners and around 7,200 deferred scheme members.

The sponsor went into administration in 2009 and the scheme entered an assessment period at the PPF, the UK pensions lifeboat for defined benefit schemes, where it remained as protracted and complex litigation took place internationally as creditors fought over the remaining Nortel money.

With legal proceedings now resolved and the plan having received extra funding as a result, Legal & General said the pension scheme had been able to secure benefits through the buyout that were higher than PPF levels, and it would now not enter the PPF.

The intention to carry out a buyout had been flagged back in March, when the UK pension plan’s trustee board announced a £550m windfall from the group’s liquidation, which brought total recoveries for the scheme to £1.2bn.

David Davies, chair of Nortel Networks UK Pension Trust, said today: “We are pleased to have been able to deliver such a great result for the members of the plan.

“This ends a near decade long process for the plan and provides security for all our members, whether they are already receiving their pension or planning for their future retirement.”

Davies said that “extensive and ultimately successful” litigation had enabled the trustee to secure significant recoveries.

“As a result the buyout has meant that we can provide most members with the flexibility to decide between different pension options that give them greater control over their future pension income.”

Laura Mason, chief executive of Legal & General Retirement Institutional, said it was the collaborative relationship built up with KPMG and the trustee that had meant her firm was able to provide “a complex solution” which met the needs of the trustee and plan members – to tight timescales.

KPMG acted as insurance broker and de-risking adviser to the scheme’s trustee.

Tom Seecharan, head of pension insurance at KPMG, said the deal – which involved benefit design, member options and full buyout – set a new benchmark for PPF cases.

“Our challenge was to help the trustee find ways to put as much money as possible in the members’ pockets. I’m very pleased that we were able to achieve that,” he said.

Travers Smith acted as legal advisers to the trustees while Eversheds Sutherland provided legal advice to Legal & General.

Willis Towers Watson is the scheme actuary, and Mercer acted as the trustee’s investment adviser.