Under swap transaction, Pacific Life Re will cover Lloyds Bank Pension Scheme No.1, Lloyds Bank Pension Scheme No.2 and the HBOS Final Salary Pension Scheme
Image: Lloyds Banking Group head office. (Credit: Lloyds Banking Group.)
Pacific Life Re has completed a pension risk transfer transaction with Lloyds Banking Group Pensions Trustees Limited, amounting to £10bn.
The transfer with Pacific Life Re covers the longevity risk in respect of £10bn of pensioner liabilities across some of the bank’s pension schemes.
The longevity swap deal covers Lloyds Bank Pension Scheme No.1, Lloyds Bank Pension Scheme No.2 and the HBOS Final Salary Pension Scheme.
Pacific Life Re, longevity head Andy McAleese said: “Pacific Life Re has been a long-term supporter of longevity risk transfer, having completed the first UK pension scheme longevity swap in 2009. There have been record volumes of pension risk transfer in 2019 and we are continuing to see very strong demand carrying over into 2020.
“This milestone arrangement demonstrates that longevity swaps continue to be an important risk transfer tool for pension schemes.”
Scottish Widows is the insurer and onwards reinsurance to Pacific Life Re in the deal
Considered to be the second largest transaction to have ever completed in the UK, it is structured as an insurance policy, where Scottish Widows acted as the insurer and onwards reinsurance to Pacific Life Re.
The policy will also protect the schemes from financial risk of unexpected increase in life expectancy and make the scheme more secure for the benefit of all of its members.
Pacific Life Re, project lead Simon Bramwell said: “We are delighted to have worked with the Trustee and its advisors and, in particular, the level of clarity and engagement they brought to the process. In a busy marketplace, being clear and decisive on data, terms and timescales gives everyone confidence in the process and has resulted in a positive outcome for all.
“I’d also like to thank CMS in providing direct and pragmatic legal advice, helping to ensure that a significant and complex transaction was completed quickly and efficiently.”
The deal is considered as the second biggest after the £16bn longevity swap by BT Pension Scheme with Prudential Insurance in 2014.