The BT Pension Scheme (BTPS) has completed two longevity swap transactions to further protect from the cost of unexpected increases in its members’ life expectancy.
The scheme has 260,000 members and £36 billion of assets under management.
The new longevity insurance and reinsurance arrangements cover BTPS’ £5 billion pensioner liabilities with Swiss Re and increase existing cover with Reinsurance Group of America (RGA) by £5 billion. The reinsurance leverages the scheme’s existing infrastructure, which was facilitated via the scheme’s existing captive insurer. The transaction will have no impact on BT’s cash contributions to the scheme.
BTPS partnered with RGA to further support the scheme’s aims of stability and financial security of retirement benefits for its members. The transactions were led by its primary services provider Brightwell, and supported by WTW and A&O Shearman, with Swiss Re advised by Willkie Farr and Gallagher.
Jill Mackenzie, chair of trustees at BTPS, 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.”
Wyn Francis, chief investment officer at Brightwell, 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.”
Kerry McMullan, head of life and health structured solutions at Swiss Re, said: “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.”
