On the go: The Barclays Bank UK Retirement Fund has completed a £5bn longevity swap with Reinsurance Group of America.
The deal helps protect the UKRF from the financial risk of an unexpected increase to life expectancy for current pensioners, a statement read.
Peter Goshawk, chairman of the scheme’s trustee board, noted the longevity swap is another significant step in its “derisking journey for the UKRF, improving benefit security for all members”, in addition to the “material reduction of deficit revealed at the 2019 actuarial valuation”.
As Pensions Expert reported in September, the scheme’s deficit dropped to £2.3bn in September 2019 from £7.9bn in 2016. This equates to the funding level increasing to 94 per cent in 2019 from 81.5 per cent in 2016.
According to Tom Scott, principal consultant in Aon’s risk settlement team — which advised the scheme — the transaction, “along with others in the pipeline, demonstrates the capacity and appetite of the global reinsurance market to take on pension fund longevity risk, even in these challenging times”.
“Despite the current economic climate, pension schemes can still successfully access the reinsurance market in an effective manner,” he added.
Insight Investment was appointed as the collateral manager on the transaction.
