British Airways pension fund transfers £21bn of assets to BlackRock
British Airways has handed the management of pension scheme assets worth more than £21bn to BlackRock, marking one of biggest transfers from a UK corporate pension scheme to an external investment manager.
The handover involves the airline's Airways Pension Scheme (APS) and New Airways Pension Scheme (NAPS), two of the UK’s largest corporate defined benefit pension schemes, that manage benefits for more than 85,000 members and beneficiaries.
The move comes after BA was forced to delay payments worth £450m to its pension fund in February to conserve cash following the pandemic-induced disruption to air travel.
The company usually pays £37.5m a month into NAPS, but struck a deal with its trustees to delay contributions until September 2021.
It is seeking to plug a £2.4bn hole in the scheme, which was uncovered during a valuation in 2018. The airline has paid £1.3bn of that total, including £263m in 2020.
Roger Maynard, a trustee of both APS and NAPS, said: "Operating as our in-house investment manager, [British Airways Pension Investment Management Ltd] has delivered excellent investment performance and stewardship of the schemes over many years.
"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."
BA shut future contributions to NAPS in 2018, moving its employees on to a new, less generous fund. The scheme was a final-salary plan that guaranteed workers a proportion of the salary they earned in the year before they retired.
Last year, BA was also one of several major UK employers to use emergency powers to stop members ditching their defined benefit pensions during the height of the crisis.
Mr Maynard added: "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."
Tighter regulation and rising operational costs have also caused in-house schemes to struggle in recent years.
Sarah Melvin, head of BlackRock’s UK business, said: "We are honoured to be entrusted to manage the assets of these two important pension schemes through the creation of a bespoke model. We look forward to delivering enhanced investment performance for the ultimate benefit of the schemes’ members.”
The agreement will involve the transfer of some BA Pensions employees to BlackRock.
The transition of assets completed on Tuesday.
