Marvin OnumonuBBC Pension Scheme has completed a £6bn longevity swap with Zurich Assurance Ltd (Zurich) and Metropolitan Life Insurance Company (MetLife), covering around 21,000 pensioners.
The swap provides protection against the risk of rising costs if members live longer than expected, covering nearly all pensioner and dependant liabilities in the scheme.
Under the terms, the Trustee keeps flexibility, control and security, while Zurich’s approach aims to reduce cost and operational burden.
Aon was the sole transaction adviser, handling negotiations with Zurich and broking the reinsurance with MetLife.
Legal advice went to the Trustee from A&O Shearman, Zurich from Slaughter and May, and MetLife from Eversheds Sutherland and Debevoise & Plimpton.
Catherine Claydon, chair of the BBC Scheme trustee board, said: “The Trustee is pleased to have further mitigated the Scheme’s exposure to longevity risk, through a second transaction on highly attractive terms for the Scheme.
“Many thanks to our advisers, Zurich and MetLife for achieving this important milestone.”
Greg Wenzerul, head of longevity risk transfer at Zurich, said: “We’re privileged to have partnered with the Scheme Trustee and their advisers on this important phase of their de-risking strategy.
“Supporting our clients through each step of their journey-planning in this manner reflects our commitment to putting customers first, an ethos Zurich applies across its broad customer base.
“Zurich UK’s status as a UK-regulated life insurer provides the Trustee with the highest bar of governance assurance, reinforcing confidence in long-term best practice.”
Angela Li, head of UK reinsurance at MetLife, added: “MetLife is proud to support the BBC Pension Scheme in this important step of its de-risking journey.
“Our financial strength, expertise, and commitment to innovation enables us to deliver certainty and flexibility for pension schemes managing longevity risk.
“This transaction underscores our dedication to the UK market and our ability to partner on complex, large-scale longevity swaps, providing tailored solutions that meet the evolving needs of pension schemes and the broader retirement market.”
Tom Scott, risk settlement partner at Aon, said: “This transaction is further evidence of the vibrant longevity insurance and reinsurance markets which continue to offer attractively priced and structured solutions in various forms to UK pension schemes, in this case in the form of a ‘longevity swap’ which means the Scheme retains investment control and flexibility.”
