L&G strikes UK's largest pension buy-in with British Airways
The trustees of BA's oldest retirement scheme agree a deal to insure more than 拢4bn of its historic pension liabilities.
Thursday 13 September 2018 12:03, UK
The UK's largest pension buy-in has been agreed that will see Legal & General (L&G) insure 拢4.4bn of historic pension liabilities at British Airways.
Following a report by Sky News on Wednesday evening that a deal was close, L&G confirmed on Thursday it had completed talks with the trustees of the Airways Pension Scheme (APS), covering nearly 22,000 pensioners.
It has over £8bn in assets.
"This is the largest ever bulk annuity policy arranged with a UK pension scheme and also included the conversion of existing longevity insurance into a bulk annuity," L&G said.
The deal is effectively aimed at reassuring members - and investors in BA's parent firm IAG - that 60% of its liabilities to pensioners are covered.
Virginia Holmes, who leads the APS scheme trustees, said it was the latest in a number of insurance arrangements made by the scheme to reduce risk and increase security for members.
"Today's announcement is the culmination of much hard work undertaken over several months and we are pleased to be taking this step in the scheme's de-risking journey," she said.
BA has already embarked on other efforts to trim its pensions bill, announcing earlier this year that it would introduce a new company-wide retirement plan that it promised would deliver "a significant upgrade" to more than half its workforce.
It has closed its New Airways Pension Scheme to future accrual and its British Airways Retirement Plan to future contributions.
The company has some of the largest pension obligations in corporate Britain, with almost £24bn of assets in the two previous schemes at the end of last year.
Nigel Wilson, L&G's chief executive, said: "I'm delighted that Legal & General has transacted the largest bulk annuity to date in the UK for British Airways' pension scheme.
"As we indicated at the half year results, the second half of 2018 is likely to be a record six months for our PRT (pension risk transfer) business and we expect to announce further transactions in the next few months."