Tata Steel is in talks with Legal & General about the buyout of the £15bn British Steel Pension Scheme.
The FTSE 100 insurer has approached the trustees of the scheme about taking over some, or all, liabilities, The Sunday Times reported.
It was announced earlier this month that the British Steel Pension Scheme had been an obstacle to Tata Steel merging its European steel works with German company ThyssenKrupp.
In order to move forward, the Indian conglomerate behind Jaguar Land Rover and Tetley Tea must separate the pension scheme from its steel operations via a restructuring deal.
The details of the restructuring are being finalised with the Pensions Regulator and the Pension Protection Fund (PPF).
It was also announced this month that Tata Steel was willing to pay £550m into the pension scheme and give the fund a 33 per cent stake in its UK business to avoid going under.
A new pension fund with less generous benefits would be brought in, and members given the choice of entering that or falling under the protection of the PPF.
Tata Steel acquired the scheme in 2007 as part of the £6.2bn acquisition of Anglo-Dutch steelmaker Corus. The scheme has approximately 130,000 members and a deficit of about £5bn on a buyout basis.
Legal & General declined to comment and Tata Steel was unavailable.