BA transfers staff pensions to L&G
Insurer Legal & General is to take on responsibility for paying the pensions of 22,000 members of the British Airways pension scheme.
Insurer Legal & General is to take on responsibility for paying the pensions of 22,000 members of the British Airways pension scheme in a £4.4bn bulk annuity deal, the biggest ever such transaction agreed in the UK.
In a bulk annuity deal, defined-benefit pension schemes ie, schemes that promise members guaranteed pensions for life in retirement pay an insurance company to deliver the benefit on their behalf. The idea is to limit risk for the pension scheme and its sponsoring employer, which must otherwise depend on educated guesswork about the life expectancy of its members as it tries to work out how much pension promises will cost and how much it must pay to fund them.
Such deals are also seen as good news for pension-scheme members, who benefit from the security of receiving their pension payments from a regulated financial-services company. This reassurance can be valuable for savers worried about the long-term financial health of their former employers in an era when many firms have gone bust, leaving substantial deficits in the funding of their pension schemes.