Swaps can work for schemes of any size, say Suthan Rajagopalan and Greg Wenzerul
A Pfizer Group-sponsored defined benefit (DB) pension scheme has completed a £190m buy-in with Aviva, following a slow start to the year in bulk annuity business for the insurer.
Longevity swap usage is expected to grow further as more reinsurers enter the market to hedge the risk of deferred members, according to Mercer.
The UBS (UK) Pension and Life Assurance Scheme has hedged the longevity risk of around half its defined benefit (DB) liabilities through a £1.4bn longevity swap completed with Zurich and Canada Life Reinsurance.
Allied Irish Bank (AIB) has secured an £850m buy-in for its UK pension scheme with Legal & General (L&G).
Increasing demand for global longevity reinsurance could lead to higher bulk annuity prices but less exact matching for longevity hedging, says Mercer.
Defined benefit (DB) schemes are set to shear themselves of over £300bn of liabilities between 2019 and 2021 as they continue to mature, Mercer predicts.
The beleaguered Nortel Networks UK Pension Plan has entered into a £2.4bn buyout with Legal & General (L&G), insuring members' benefits nearly a decade after its sponsor collapsed.