BT agrees insurance deal against pension longevity costs

LONDON, July 4 Fri Jul 4, 2014 2:18am EDT

LONDON, July 4 (Reuters) - Britain's BT has agreed an insurance and reinsurance deal to protect its pension scheme against the costs associated with increases in life expectancy, it said on Friday.

The former state telecoms group has the largest private sector defined pension plan in Britain.

BT said the arrangements it had taken out would cover over 25 percent of the scheme's total exposure to improvements in longevity, covering some 16 billion pounds ($27 billion) of the scheme's liabilities.

The trustee has set up a wholly owned insurance company, which has in turn reinsured the longevity risk with The Prudential Insurance Company of America.

BT said the agreement would not require additional contributions to be made by it.

($1 = 0.5877 British Pounds) (Reporting by Kate Holton; editing by James Davey)