Here’s the word;
The Yorkshire and Clydesdale Bank (YCB) Pension Scheme has announced a longevity swap transaction with Pacific Life Re International Limited (“PL Re”) and Zurich Assurance Ltd (“ZAL”) to manage longevity risk in relation to c£1.6 billion of pensioner liabilities. The arrangement provides long term protection to the Scheme against costs resulting from pensioners or their dependants living longer than currently expected, enhancing security for Scheme members.
The longevity insurance policy is structured as an insurance arrangement between the Trustee and ZAL, and a back-to-back reinsurance arrangement between ZAL and PL Re using ZAL’s pass-through solution. Under this pass-through structure PL Re assumes 100% of the longevity risk associated with around 9,000 members of the Scheme and the Trustee and PL Re take on mutual credit risk exposure to each other. The arrangement 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 expected.
Inder Dhingra, Chairman – Yorkshire and Clydesdale Bank (YCB) Pension Scheme said:
“The Trustee is delighted to have completed this longevity swap which will provide significant protection for our members against the costs associated with future increases in life expectancy. I would like to thank the Bank, PL Re, ZAL and our advisers for working collaboratively to help us reduce one of the Scheme’s largest risks and improve the security of our members’ benefits as a result.”
Justin Fox, Group Treasurer at Virgin Money UK PLC, said:
“Virgin Money is pleased to have worked with the Trustee in the delivery of this transaction, which demonstrates the Group’s support for the pro-active management of pension risks.”
Greg Wenzerul, Head of Longevity Risk Transfer at ZAL, said:
“We are pleased our solution matched the Trustee’s requirements for their de-risking journey. This transaction was executed efficiently due to effective and pragmatic collaboration by the parties involved.”
In addition to WTW and Sackers, the Trustee received legal advice from Walkers. PL Re was advised by CMS and ZAL was advised by Slaughter & May.