BA Pensions replaces in-house team with OCIO

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British Airways Pensions has appointed BlackRock as the outsourced chief investment officer of its pension assets to better match benefits and deal with increased regulatory and investment complexity, having transferred about £21.5bn.

The agreement covers assets under management for the Airways Pension Scheme and the New Airways Pension Scheme, which have 85,000 members, and until now have been managed by the in-house provider BAPIML.

The new team will consist of experienced BlackRock managers and transferring BA pensions professionals to ensure continuity of institutional knowledge and operational and reporting culture. The asset transfer was completed on 1 June.

The arrangement is "creating a pioneering OCIO model which will form the cornerstone of a bespoke new offering for the UK pensions market", the asset manager and BA Pensions said, citing intensified regulation and operational costs, as well as increased complexity. A need to match member benefits as the schemes mature is another driver behind the change.

With the external CIO, the scheme is hoping to achieve cost benefits, investment excellence and operational efficiencies.

“Operating as our in-house investment manager, BAPIML 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," said Roger Maynard, chair of the APS and NAPS trustee.
Sarah Melvin, Head of BlackRock’s UK business, said: “British Airways is an iconic global brand and a leader in its sector. We are honoured to be entrusted to manage the assets of these two important pension schemes through the creation of a bespoke model.  We look forward to delivering enhanced investment performance for the ultimate benefit of the Schemes’ members.”