The BT Pension Scheme (BTPS), one of the UK’s largest pension schemes, has completed two significant reinsurance transactions, covering £10bn of liabilities.
These deals protect the scheme, which has 260,000 members and £36bn assets under management, from the financial impact of members living longer than expected.
These two £5bn transactions are among the biggest longevity swaps to date. In 2014 the BT Pension Scheme completed the biggest longevity transaction – at £16bn; with Lloyds Banking Group Pension Schemes completing a £10bn transaction in 2020. Aside from these two, there have only been four other longevity transactions of over £5bn in the UK.
These longevity transactions include a new reinsurance contract with Swiss Re, which covers £5bn of pensioner liabilities. BTPS is also expanding an existing £5bn agreement with Reinsurance Group of America (RGA) — which builds on a similar transaction completed in 2023.
The transactions were led by Brightwell, BTPS’ primary services provider, with support from WTW and A&O Shearman. Swiss Re was advised by Willkie Farr & Gallagher. Overall WTW has advised on eight of the 10 largest longevity transactions in the UK.
BTPS said these transactions will not affect BT’s cash contributions to the pension scheme.
BTPS chair of trustees Jill Mackenzie says: “These transactions help to advance the development of the scheme’s long-term investment strategy, providing increased certainty for the scheme, our sponsor, and members.”
Brightwell chief investment officer Wyn Francis adds: “Brightwell’s role in delivering two concurrent longevity swaps demonstrates the value in a fully integrated fiduciary manager. These transactions will be onboarded to Brightwell’s automated, efficient and low-cost operating platform, reinforcing our experience and capability in managing all scheme risks to achieve market-leading outcomes for a scheme in run-on.”
Kerry McMullan, head of L&H structured solutions at Swiss Re adds: “We are grateful for the opportunity to bring our financial strength and longevity risk structuring experience to BTPS to make the scheme more resilient to uncertain future life expectancies and help it provide secure retirement benefits to its membership.”
