British Airways Pensions Transfers $30 Billion in Assets to BlackRock

British Airways Pensions has transferred management of its two main retirement systems totaling nearly $30.4 billion (£21.5 billion) in assets to the outsourced chief investment officer (OCIO) business at BlackRock.

The transfer is among the largest of its kind in the United Kingdom, the firm said Wednesday. The agreement affects assets under the Airways Pension Scheme (APS) and the New Airways Pension Scheme (NAPS), as well as more than 85,000 members.

“This agreement is the necessary next step in the evolution of the Schemes as they look to enhance their respective investment strategies, working toward their funding goals,” Roger Maynard, chair of trustees at APS and NAPS, said in a statement.

“In BlackRock, we have identified an asset manager that will ensure the continued focus on delivering enhanced oversight, investment management, and long-term value for the Schemes in the interests of our members,” he added.

Want the latest institutional investment industry news and insights? Sign up for CIO newsletters. 

Intensifying regulation, rising operational costs, and increasingly complex investments were cited by British Airways as reasons to seek external management for its liabilities. Those pressures intensified last year, when the beleaguered airline carrier put off making pension contributions after the pandemic grounded flights worldwide.

In February, British Airways sought a deferral for a $637.7 million contribution (£450 million) to September. At the same time, its parent company International Airlines Group, also sought a $2.8 billion (£2 billion) loan guarantee.

Of course, British Airways had been limiting its defined benefit liabilities for some time. In 2018, the company closed two of its pension funds to future accruals for participants, and contributions, instead replacing both with a defined contribution plan with flexible benefits.

The same year, the carrier insured nearly $7.5 billion in assets under the APS system through pension risk transfer to Legal and General Assurance Society, in what was the biggest annuity deal of its kind in the UK at that time.

Now other employees will also be transferred under the agreement to BlackRock, including all members under the British Airways Pension Investment Management Ltd (BAPIML) and some employees of British Airways Pension Services Limited (BAPSL). More than 85,000 members are under the company.

The transition of assets was completed June 1.