The BT Pension Scheme (BTPS) has agreed a £5bn longevity swap with Reinsurance Group of America (RGA), protecting the scheme from the cost of unexpected increases in the life expectancy of its members.

The deal was led by Brightwell, together with WTW and Allen & Overy, while RGA was advised by Eversheds Sutherland.

It was facilitated through an insurance intermediary via the scheme’s existing ‘captive’ insurer, which helped to efficiently leverage the scheme’s existing infrastructure.

The longevity insurance and reinsurance arrangement covers £5bn of BTPS pensioner liabilities, building on the £16bn of liabilities previously covered by a similar arrangement in 2014.

Commenting on the news, BTPS chair of trustees, Otto Thoresen, stated: “Longevity risk is one of the biggest risks facing the Scheme. This transaction helps provide greater certainty for the Scheme, our sponsor and members.”

Adding to this, Brightwell chief investment officer, Wyn Francis, stated: “With this transaction, we’ve taken a fresh approach using technology to drive down the time between quotation and execution.

“Protecting the scheme from unexpected rises in life expectancy is a core component to reaching a cash flow matched position by 2034.”

Also commenting on the deal, RGA UK senior vice president, global financial solutions, Emma Ferris, added: “We are delighted to have partnered with BTPS to help reduce the longevity risk in the scheme, using our financial security and longevity expertise to enable the scheme to focus on its core mission of providing stable and sustainable retirement benefits.”

The transaction is not expected to have any impact on BT’s cash contributions to the scheme, nor on the 2023 triennial valuation.

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