The Trustee of the YCB Pension Scheme has concluded 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£1.6bn of pensioner liabilities. Sackers is the longstanding adviser to the Trustee and advised them throughout the transaction.
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 of the YCB Pension Scheme, said: “The Trustee is hugely grateful to the team at Sackers for all their hard work, clear advice, commitment and dedication to getting the transaction signed. As longstanding advisers to the Scheme, their in-depth knowledge of the Scheme combined with their risk transfer expertise has been invaluable.”
Paul Phillips, partner at Sackers, said: “We were delighted to advise and support the Trustee on this important transaction, which marks a key milestone in the Scheme’s management of risk and underlines their commitment to securing member benefits. It was very much a team effort with all parties working efficiently and collaboratively with the Scheme to ensure the transaction completed smoothly and successfully for the benefit of members.”
To find out more, read Professional Pensions’ coverage, here.