UK - The £3.5bn (€4.3bn) BMW (UK) Operations Pension Scheme has confirmed it is looking at strategies for "risk reduction and control".

"The trustees and BMW Group are always looking at options for controlling and reducing the risks associated with the financing of the Scheme," BMW said in a statement.

"A longevity hedge would simply make it easier for the company to budget for future pension payments and therefore make scheme funding more secure overall, which of course benefits everyone in the Scheme."  

At the same time, however, it was pointed out that "many new ideas for risk reduction and control are considered" but would only be implemented if trustees decide the strategies are in the full interest of the scheme members. 

It was also noted that "in recent years a number of strategies have been implemented" to reduce cost and risk, one of them being "the establishment of a liability-matched bond portfolio."

Deutsche Bank is alleged to be one of the parties, via it UK Abbey Life operations, negotiating a longevity hedge related to the BMW UK pension scheme. The other party involved in the longevity hedge worth up to £2.5bn is understood to be Paternoster.

At its last formal valuation in April 2007, the BMW UK scheme was already £584m in deficit and had a funding ratio of 87%.

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