AXA UK Pension Scheme secures £3bn deferred longevity swap deal with Hannover Re

18 March 2021

Posted in Public Affairs

  • The longevity swap deals with £3bn of pension liabilities
  • It covers pensions that may come into payment after 31 March 2019 within the AXA UK Group Pension Scheme
  • When combined with previous swaps, nearly 93% of the pension scheme’s liabilities are now protected against the chance of members living longer than anticipated

The AXA UK Group Pension Scheme has entered into a longevity swap with Hannover Re to protect £3bn of mostly deferred pension liabilities held in its Defined Benefit plan.

The arrangement provides long-term protection to the Scheme against the costs associated with pensioners living longer than expected once they come into payment. The coverage of a material number of deferred members is thought to be a first within the UK pensions market.

The swap, which closed on 27 February 2021, will form part of the Scheme’s investment portfolio, building upon previous transactions undertaken to protect pensions that had already come into payment by 31 March 2019.

The Trustee and AXA appointed Willis Towers Watson and Linklaters LLP as lead advisors to the transaction.

“I am happy that the AXA UK Group Pension Scheme has taken a further important step to ensure that our scheme members’ benefits are strongly secured against improvements in life expectancy. De-risking the scheme will benefit all of our DB scheme members and will not affect any payments to members as they will continue to receive their pension as normal. This is a very positive step in providing additional security of members’ pensions.”

— Stephen Yandle, Chair, AXA UK Pension Trustees

“We are pleased to continue to support the AXA UK Group Pension Scheme by leveraging our internal technical and operational expertise to secure members’ benefits. The collaboration with Hannover Re in implementing a deferred longevity swap, believed to be the first transaction of its type entered into by a pension fund trustee, assists in stabilising the capital position of AXA UK and furthers our commitment to proactively managing our non-core business risks.”

— Vikram Chatrath, Head of Pension Strategy, AXA UK

“We have successfully teamed up with the AXA UK Group Pension Scheme and AXA UK to provide protection for its scheme members not yet in payment. We are more than happy to support our clients with risk capacity in areas where our clients particularly need our protection. Our long term expertise in the longevity market enables us to provide solutions for market segments otherwise difficult to place. This transaction proves once again Hannover Re’s capability and commitment to grow its global longevity business”

— Claude Chèvre, Executive Board Member, Hannover Re