British Airways Pension Fund to Enter $425.6M Longevity Swap with MetLife, Zurich

The Airways Pension Scheme, the defined benefit corporate pension of British Airways, announced that it has entered into a longevity swap transaction with the Metropolitan Tower Life Insurance Company and Zurich Assurance Ltd.

The swap transaction, which will transfer the longevity risk of 340 million pounds ($425.6 million) of the plan’s assets, will cover 1,100 members of the pension, transferring the risk of plan beneficiaries living longer than expected to the insurers.

MetLife will assume 100% of the longevity risk associated with the plan beneficiaries. The longevity swap will also cover an unspecified number of non-pension employees.

“The arrangement will provide long-term protection to the scheme against costs resulting from members living longer than currently expected, enhance security for scheme members, and transfer longevity risk in respect of active and deferred members of the scheme in addition to members with pensions in payment,” according to a statement from WTW.

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At the beginning of the year, WTW, which advised British Airways on the transaction, predicted 2024 would be a record year for bulk annuity and longevity swap transactions, reaching 80 billion pounds this year.

As corporate pension funds continue to have a funding surplus, the pension de-risking market has continued to increase. In the U.K., the pension risk market completed 20 billion pounds worth of deals in the first half of the year, according to Legal & General Retirement America, which predicts another 20 billion pounds by year end.

In June 2021, the Airways scheme selected BlackRock as an outsourced CIO provider for 21.5 billion pounds ($26.92 billion) of plan assets, covering more than 85,000 plan members and beneficiaries.