British Airways hands over the operation of a mammoth pension fund worth 21 billion
- The transfer of management concerns the Airways Pension Scheme
- It also includes the New Airways Pension Scheme, which closed in 2018
British Airways has turned operations of its huge pension fund over to US investment management giant BlackRock.
The BA’s occupational pension scheme has assets worth over £ 21.5 billion, which means the transfer is one of the largest of its kind to an outside investment manager.
The transfer of management to BlackRock affects the airline’s Airways Pension Scheme and New Airways Pension Scheme, two of the largest defined benefit plans in the country that manage benefits for over 85,000 members and beneficiaries.
Transfer: British Airways has turned over management of its huge pension fund to US investment giant BlackRock
BA’s pensions were previously internally provided by British Airways Pension Investment Management Ltd. managed.
APS Trustee Chairman and NAPS Trustee Roger Maynard said: ‘As our in-house investment manager, BAPIML has had excellent investment performance and system management over many years.
‘This agreement is the necessary next step in the development of the programs to improve their respective investment strategies and work towards their funding goals.
‘With BlackRock we have identified an asset manager who, in the interests of our members, continues to focus on improved supervision, investment management and long-term value for the schemes. We look forward to working with BlackRock in the years to come. ‘
Earlier this year, BA owner IAG reached an agreement with one of its pension funds to defer £ 450m in pension deficit contributions to save money until the airline can fly at full capacity again.
The agreement with the New Airways Pension Scheme means that BA will defer the monthly contributions of £ 37.5 million due between October 2020 and September 2021 until March 2023.
As part of the deal, BA pays interest on the deferred cash and deposits real estate assets as collateral, which will remain in place until the airline has repaid the pension contributions.
It seeks to close a £ 2.6bn deficit that was discovered back in 2018. B.A has made £ 1.34 billion in contributions to the New Airways Pension Scheme since March 2018 when it closed, and has moved its employees to a new, less generous fund.
The New Airways Pension Scheme was a final salary plan that guaranteed workers a percentage of their salary in the year before they retired.
New management: The change in management to BlackRock affects the Airways Pension Scheme and the New Airways Pension Scheme
In 2020, BA was one of several large employers to use emergency powers to prevent members from giving up their defined benefit pensions during the height of the crisis.
BlackRock said today: “The size and scale of the partnership marks a landmark moment in the UK pension industry.
‘In recent years, regulation has intensified, operating costs have risen, and investment complexity has increased.
‘As a result, many UK pension funds are seeking external investment management capabilities with the scale and resources to meet the challenges.’
The transfer of assets was completed on June 1st.
BA slumped to an operating loss of £ 3.9 billion in 2020, which is more than half of the airlines’ total loss for the year.
According to the FTSE 100 company’s annual reports, BA’s loss dwarfed that of its stablemates Aer Lingus, Iberia and Vueling.
IAG’s shares are up 0.85 percent, or 1.75 pence, to 208.75 pence. A year ago the share price was 170.82 pence.