AXA UK Group Pension Scheme said it has closed a longevity swap deal with Reinsurance Group of America (RGA) to manage longevity risk relating to 2.8 billion pounds of pension liabilities held in its defined benefit or DB section.
The arrangements cover 11,000 DB scheme pensioners and provide long term protection to the Scheme against costs resulting from pensioners living longer than initially expected, hence, enhancing security for Scheme members.
The swap will form part of the Scheme's investment portfolio and will provide income to the Scheme in the event that members live longer than currently anticipated.
The swap covers around half of the Scheme's liabilities. In respect of this transaction the Group Pension Scheme Trustee and the Company appointed Towers Watson and Linklaters LLP as lead advisors.
Stephen Yandle, Chairman - AXA UK Pension Trustees Limited, said, "By significantly de-risking the scheme, this will benefit all our DB scheme members and will not affect any payments to members as they will continue to receive their pension as normal......This is a very positive step in providing additional security of members' pensions."
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