Jill Mackenzie: These transactions help to advance the development of the scheme’s long-term investment strategy
The BT Pension Scheme (BTPS) has completed longevity reinsurance transactions totalling £10bn with Swiss Re and Reinsurance Group of America (RGA).
The £36bn scheme said the deals come in a bid to further protect BTPS from the cost of unexpected increases in the life expectancy of its members and follow similar arrangements the scheme completed in 2023, where £5bn of liabilities were covered with RGA, and in 2014, where £16bn of liabilities were covered with the Prudential Insurance Company of America (PICA).
The latest longevity insurance and reinsurance arrangements cover BTPS pensioner liabilities of £5bn with Swiss Re and increases existing cover with RGA by £5bn.
BTPS said the reinsurance efficiently leverages the scheme's existing infrastructure which has been facilitated via its existing captive insurer.
It said the transaction will have no impact on BT's cash contributions to the scheme.
The transactions were led by Brightwell, BTPS' primary services provider, and supported by WTW and A&O Shearman. Swiss Re were advised by Willkie Farr & Gallagher.
BTPS chair of trustees Jill Mackenzie said: "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 added: "Brightwell's leading 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."
The largest longeveity swaps completed to date
Source: WTW
RGA UK managing director Emma Ferris said: "We are delighted to have once again partnered with BTPS on this transaction, further supporting the scheme's aims of stability and financial security of retirement benefits for its members."
Swiss Re head L&H structured solutions Kerry McMullan agreed: "We are very 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 helping it provide secure retirement benefits to its membership."
