British Airways is appointing Blackrock Inc. as outsourced chief investment officer for its two defined benefit pension plans.
While many U.K.-based pensions have adopted an OCIO model, the agreement is significant due to its scale. The Airways Pension Scheme and New Airways Pension Scheme have combined assets of £21.5 billion ($36.82 billion), making the transfers to an OCIO the largest in the U.K.
In a press release, BA cited intensified regulation, high operational costs and an increase in the complexity of investments as reasons for the transfer of the pension fund assets.
According to BA, the decision to partner with Blackrock was made after a competitive selection process. The investment manager was selected because of its deep knowledge of the U.K. pensions sector, scale, management technology and investment.
In the release, Roger Maynard, chair of the trustees for the two plans, described the agreement as necessary for the pensions in order to enhance their investment strategies. “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.”
The two DC plans represent 85,000 members and beneficiaries. An undisclosed number of employees from both plans will be transferred to Blackrock and remain involved the management of the plans’ assets.