The BT Pension Scheme (BTPS) has announced a longevity reinsurance agreement with Reinsurance Group of America (RGA) covering £5bn of pensioner liabilities.
The transaction protects BTPS, which has 270,000 members and £47bn of assets under management, from unexpected increases in the life expectancy of its members.
The arrangement covers £5bn of BTPS pensioner liabilities and follows the £16bn longevity risk deal BTPS entered into with Prudential Insurance Company of America in 2016.
The reinsurance has been facilitated through an insurance intermediary via the scheme’s existing captive insurer, thereby leveraging the scheme’s existing infrastructure.
The deal will have no impact on BT’s cash contributions to the scheme, nor on its 2023 triennial valuation, it was announced.
The transaction was led by Brightwell, BTPS’ primary service provider, together with WTW and Allen & Overy, with RGA being advised by Eversheds Sutherland.
Otto Thoresen, chair of BTPS trustees, said: “Longevity risk is one of the biggest risks facing the scheme. This transaction helps provide greater certainty for the scheme, our sponsor and members.”
Emma Ferris, senior vice-president of global financial solutions at RGA, added that the transaction will help use RGA’s “financial security and longevity expertise to enable the scheme to focus on its core mission of providing stable and suitable retirement benefits”.
Wyn Francis, chief investment officer at Brightwell, said: “With this transaction, we’ve taken a fresh approach using technology to drive down the time between quotation and execution.”
He added that protecting the scheme from unexpected rises in life expectancy is “a core component to reaching a cash flow-matched position by 2034”.
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