Longevity transaction with Aviva Staff Pension Scheme
In 2014, we participated in a landmark longevity transaction with the Aviva Staff Pension Scheme in the UK. With life expectancy rising, pension schemes face the risk that they will not be able to meet all their commitments. Longevity transactions cover this risk by insuring the schemes’ liabilities in case their members live longer than expected.
At the time, the deal with the Aviva Staff Pension Scheme was the largest longevity transaction ever completed. It covers GBP 5 billion of liabilities and protects not only the scheme’s 19 000 members with pensions in payment, but their widows or widowers and civil partners, as well. Swiss Re is in a position to write such large deals because we have a natural offset through our mortality business, the capacity to write the business to our own balance sheet and the expertise to create tailor-made solutions.
In technical terms, we worked together with two other reinsurers to transfer the longevity risk from the Aviva Staff Pension Scheme to Aviva Life & Pensions UK Ltd and then to the reinsurance market.
Longevity deals in the UK
The longevity solution we have developed with the Aviva Staff Pension Scheme is the latest in a series of such transactions in the UK. Our other clients include one of AkzoNobel’s pension funds (17 000 members), the LV=pension fund (more than 5 000 members) and the Royal County of Berkshire Pension Fund (11 000 members).
For more information see Funding longer lives