After a decade-long battle the UK pension fund of bankrupt Canadian telecoms company Nortel Networks is to exit the Pension Protection Fund (PPF) due to a £550m (€628m) windfall from the group’s liquidation.

The payment will bring the total recoveries for the scheme to £1.2bn, according to the Nortel Networks UK Pension Plan’s trustee board.

The trustees said today they would seek a full insurance buyout of the fund to ensure members received benefits higher than they would have received had the scheme entered the PPF, the UK’s lifeboat fund for defined benefit schemes.

Members would be offered the opportunity to transfer out of the scheme – which is not possible in the PPF – or to take a “pension increase exchange”, which involves individuals sacrificing future inflation-linked uplifts in exchange for a higher nominal annual benefit.

“Preliminary discussions have been held with a number of insurance companies to obtain indicative quotations which will be firmed up as members make their decisions re options,” the trustees said. “The [board] expects to choose an insurance company late summer 2018.”

The scheme has been in the PPF’s assessment period since Nortel went bust in 2009. Since then the trustees and the PPF have worked to secure cash and assets from the liquidators of Nortel in the US and Canada.

In 2016 a landmark legal ruling put the company’s pension funds on a par with bondholders. The UK scheme was Nortel’s biggest single creditor.

“The opening and middle game period have come to an end after nine long years and we have reached the beginning of the end.”

David Davies, chair, Nortel Networks UK Pension Plan

Jonathon Land, head of PwC’s pensions credit advisory practice and an adviser to Nortel’s UK pension trustees, said the ruling was a “turning point in the scheme’s fortunes”.

“The trustees should be very proud of their achievements and this excellent result,” Land added. “They could easily have stepped back when the group entered insolvency, but instead were determined to have an equivalent seat at the table to other stakeholders and secure a better outcome for the schemes’ members.

“It is particularly pleasing that the many years of hard work will enable extra money to be placed into the pockets of pensioners, who helped to generate Nortel’s assets.”

David Davies, chair of the trustee board, said: “In chess parlance, the opening and middle game period have come to an end after nine long years and we are now in the end game – we have reached the beginning of the end.”

The scheme said it expected to exit the PPF’s assessment process formally in October.

A spokesperson for the PPF said: “We have been closely working with the trustees and other parties since 2009 to reach an outcome that was in the best interests of scheme members and our levy payers. During this time Nortel pension scheme members have had the reassurance that they have been protected by the safety net of the PPF.

“We are pleased that a settlement was agreed that provided sufficient recoveries to offer members benefits above PPF compensation levels and ensure no claim on the PPF.”

The Nortel UK scheme had a buyout deficit of more than £2bn at the time of the insolvency, and catered for 40,000 members. The trustee board pursued litigation in Canada, the US, France and the UK to secure recoveries from the so-called “lockbox” of Nortel assets, worth an estimated $7bn.