The BT Pension Scheme (“BTPS”) or (“the Scheme”) one of the UK’s largest private sector pension schemes with c.270,000 members and £47bn of assets under management¹ has entered into a longevity reinsurance arrangement (“the transaction”) with Reinsurance Group of America, Incorporated (“RGA”). The transaction further protects BTPS from the cost of unexpected increases in the life expectancy of its members.

The new longevity insurance and reinsurance arrangement covers £5bn of BTPS pensioner liabilities and follows the £16bn of liabilities covered by a similar arrangement entered into by BTPS in 2014. The reinsurance has been facilitated through an insurance intermediary via the Scheme’s existing ‘captive’ insurer, thereby efficiently leveraging the Scheme’s existing infrastructure.

The transaction will have no impact on BT’s cash contributions to the Scheme, nor on the 2023 triennial valuation.

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 Trustees, BTPS 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.”

Wyn Francis, Chief Investment Officer, Brightwell, said: “With this transaction, we’ve taken a fresh approach using technology to drive down the time between quotation and execution. Protecting the Scheme from unexpected rises in life expectancy is a core component to reaching a cash flow matched position by 2034.”

Emma Ferris, Senior Vice President, Global Financial Solutions, RGA UK, said: “We are delighted to have partnered with BTPS to help reduce the longevity risk in the Scheme, using our financial security and longevity expertise to enable the Scheme to focus on its core mission of providing stable and sustainable retirement benefits.”