Telecommunications firm BT’s pension scheme has entered into a longevity reinsurance arrangement with Reinsurance Group of America (RGA), which covers £5 billion of pensioner liabilities.
The transaction protects the private sector pension scheme, which has around 270,000 members and £47 billion of assets under management, from the cost of unexpected increases in the life expectancy of its members.
The reinsurance has been facilitated through an insurance intermediary via the scheme’s existing captive insurer in order to efficiently leverage the scheme’s existing infrastructure. The new arrangement follows the £16 billion of liabilities covered by a similar deal that the BT Pension Scheme entered into in 2014.
The transaction was led by Brightwell, which is BT Pension Scheme’s primary service provider, together with Willis Towers Watson, and Allen and Overy. RGA was advised by Eversheds Sutherland. It will have no impact on BT’s cash contributions to the scheme, nor on the 2023 triennial valuation.
Otto Thoresen, chair of trustees at BT Pension Scheme, 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.”