British Airways entrusts management of the pension fund to BlackRock

British Airways hands over management of gigantic £ 21 billion pension fund serving 85,000 members to US investment giant BlackRock

  • The transfer of management concerns the Airways pension plan
  • It also encompasses the New Airways pension plan which closed in 2018

British Airways has entrusted the management of its huge pension fund to the American investment management giant BlackRock.

BA’s corporate pension scheme has assets worth over £ 21.5 billion, meaning the transfer is one of the largest of its kind to an outside investment manager.

The transfer of management to BlackRock involves the Airways pension plan and the airline’s New Airways pension plan, two of the largest defined benefit company pension plans in the country, which administer the benefits of more than 85,000 members and beneficiaries.

Transfer: British Airways has entrusted the management of its huge pension fund to the American investment giant BlackRock

BA’s pensions were previously managed internally by British Airways Pension Investment Management Ltd.

The Chairman of the APS Administrator and NAPS Administrator Roger Maynard said: “As our internal investment manager, BAPIML has provided excellent investment and program management performance over the past year. many years.

“This agreement is the next necessary step in the evolution of the plans as they seek to improve their respective investment strategies, working towards their funding goals.

“At BlackRock, we have identified an asset manager who will ensure that the focus is on improving the oversight, investment management and long-term value of programs for the benefit of our clients. members. We look forward to working with BlackRock in the years to come. ‘

Earlier this year BA’s owner IAG struck a deal with one of its pension funds to defer £ 450million in contributions to the pension deficit to save money until that the airline can resume flying at full capacity.

The deal with the New Airways Pension Scheme means BA will defer monthly contributions of £ 37.5million due between October 2020 and September 2021 until March 2023.

Under the agreement, BA will pay interest on deferred cash and put real estate assets as collateral, which will remain in place until the airline has repaid pension contributions.

He is seeking to close a deficit of £ 2.6 billion, discovered in 2018. BA has made £ 1.34 billion in contributions to the New Airways pension plan since March 2018 when it closed it, shifting its employees to a new, less generous fund.

The New Airways pension plan was a final salary plan, which guaranteed workers to receive a proportion of their salary in the year prior to retirement.

New management: Transfer of management to BlackRock concerns the Airways pension plan and the airline's new Airways pension plan

New management: Transfer of management to BlackRock concerns the Airways pension plan and the airline’s new Airways pension plan

In 2020, BA was one of the major employers to use emergency powers to prevent members from abandoning their defined benefit pensions at the height of the crisis.

BlackRock said today: “The size and breadth of the partnership marks a watershed moment in the UK pensions industry.

“In recent years, regulations have intensified, operational costs have increased and the complexity of investments has increased.

“As a result, many UK pension schemes are looking outside for investment management capabilities with the scale and resources to meet the challenges.”

The asset transition was completed on June 1.

BA fell to an operating loss of £ 3.9bn in 2020, which is more than half of the airline group’s total loss for the year.

According to the annual reports of the FTSE 100 company, BA’s loss eclipsed that of his teammates Aer Lingus, Iberia and Vueling.

IAG shares are up 0.85% or 1.75p to 208.75p right now. A year ago, the share price was 170.82 pence.

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