British Airways has handed the management of £21bn worth of pension assets to Blackrock in a bespoke deal between the airline and the asset manager.
The agreement encompasses the assets directly under management for BA’s Airways Pension Scheme (APS) and New Airways Pension Scheme (NAPS), which serve 85,000 members and until now have been managed by an in-house provider.
Roger Maynard, a trustees of both APS and NAPS, said: “Operating our in-house manager, British Airways Pension Investment Management, 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.
“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.”
In recent years, regulation of pension schemes has intensified, operational costs have risen, and investment complexity has increased.
As a result, many pension schemes are looking externally to big investment managers with the scale and resources to take on those challenges.
Sarah Melvin, head of BlackRock’s UK business, added: “We are honoured to be entrusted to manage the assets of these two important pension schemes through the creation of a bespoke model.”
Both APS and NAPS are closed to new contributions. The defined benefit (DB) schemes, often described as gold-plated, guarantee a member an income for life, and in the private sector few DB schemes are open to new members.
Pilots in particular have looked into transferring out of BA’s schemes in recent years, with the coronavirus, and fears the airline – and subsequently the pension – could collapse due to pressure on the aviation industry.
The deal also involved the transfer of employees for BA’s in-house pension manager to BlackRock.