The BP Pension Fund, one of the largest standalone corporate defined benefit pension schemes in the UK, has completed its first bulk annuity transaction, a buy-in worth £1.6bn with Legal & General.
The insurance giant announced the transaction today, saying that it was the result of a “close collaboration” between the BP Pension Fund and L&G.
The pension fund had £18.6bn in assets at the end of December 2024, according to BP’s most recent annual report and accounts. Its liabilities were valued at approximately £13.8bn, giving it a £4.7bn surplus and a funding level of 134%.
L&G said it provided a price lock for the transaction based on the pension scheme’s gilt holdings, which “aided the smooth execution of this transaction during a period of elevated market volatility”.
Brendan Nelson, chair of the trustee board, added: “This buy-in follows a detailed review of the options available to support the fund’s derisking journey and hence the security of members’ accrued benefits.
“On behalf of the board, I’d like to thank L&G for their collaboration throughout our journey from initial exploration to concluding this transaction, and our advisers for their support.”
Andrew Kail, chief executive officer of L&G’s institutional retirement business, said: “We are delighted to have completed this buy-in with the fund, which supports the fund’s trustee in its management of risk.”
Aon was the lead transaction adviser to the BP Pension Fund trustee board, while Linklaters provided legal advice, and Cardano advised on insurer covenant. Mercer was the scheme actuary, Redington was the investment adviser, and Macfarlanes and DLA Piper provided legal advice to L&G.
The transaction is the biggest bulk annuity deal that L&G has announced this year. In March, the insurer announced a triple buy-in with schemes sponsored by mining giant Anglo American worth a combined £785m. This was followed by an £800m buy-in with Honda’s UK pension scheme announced in July.
Last year, L&G said it aimed to write between £50bn and £65bn of UK bulk annuity business in the five-year period ending 2028.
Members voice disappointment amid dispute over discretionary increases
In response to the bulk annuity announcement, a spokesperson for the BP Pensioner Group, which comprises more than 3,000 members of the BP Pension Fund, said: “We are disappointed that the trustee is focused on transferring fund assets to insurance companies while pensions paid to members have been eroded by 11% despite the fund having a record surplus of almost £4bn.”
They added that the BP Pensioner Group was currently pursuing complaints against the trustee board and BP with the Pensions Ombudsman.
The spokesperson continued: “Buy-in arrangements are often the precursor to the full buyout of the members’ fund by an insurance company. It is important that trustees keep members fully informed of any plans they may have to transfer their fund to a third party.”
The comments refer to a long-running dispute between members and the pension scheme over discretionary increases to pensions. Members have been lobbying MPs over the issue and gave evidence to the Work and Pensions Select Committee’s DB enquiry last year.
MPs scrutinising the Pension Schemes Bill earlier this month considered amendments that would have placed on a statutory footing inflation-linked increases for members with benefits accrued before April 1997. However, the amendments were voted down by the committee.
The BP members’ dispute relates to more recent discretionary increases and the failure to pay these in recent years, and is not linked to pre-1997 benefits.
This article has been updated on 25 September 2025 to correct the value of the surplus in the BP Pension Fund.
