Rothesay Life has announced a £1.3bn pension buy-in with British Airways (BA) Airways Pension Scheme (APS).

The scheme, which is one of the two defined benefit (DB) plans sponsored by BA, will see the insurance policy provide cover for 20 per cent of the pension payments due in respect of scheme members already receiving pension benefits.

The transaction was designed and executed by Rothesay Life, and sees the trustees retain ownership of the assets that back the transaction, which provides protection for the scheme. Rothesay Life pays the agreed portion of pensioner benefits to the trustees in return for the proceeds of those assets.

“We are delighted to have worked with the Airways Pension Scheme on this solution and that another pension scheme sponsored by a FTSE 100 company has selected Rothesay Life as their preferred insurance provider,” explained Keith Satchell, chairman of Rothesay Life. “Rothesay Life has insured in excess of £3.5bn of pension liabilities in the last 12 months, confirming our leading position in the UK pension scheme buyout market.”

Lane Clark & Peacock LLP added that the transaction, between the subsidiary of Goldman Sachs and BA, further cements the demand for risk reduction. “The deal between British Airways’ pension scheme and Goldman Sachs’ insurance company shows the continued appetite for using insurance solutions to reduce pensions risk, following on the back of deals by Aggregate Industries and BMW earlier this year,” said Charlie Finch, partner. “At £1.3bn this is the third largest insurance transaction ever by a UK pension scheme but is only a small step towards addressing British Airways’ pension liabilities which are over £15bn in total.”

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