Tthe Balfour Beatty Pension Fund has completed a £1.7bn longevity reinsurance transaction covering the pensions of more than 15,000 members of the scheme’s defined benefit (DB) section with SCOR and Zurich UK.

Under the terms of the deal, SCOR will take on 100% of the longevity risk of the pensioners covered. Zurich UK will act as an intermediary insurer, adopting a “pass-through” structure that facilitates the risk transfer to SCOR as the reinsurer, SCOR announced.

SCOR was selected as the trustee’s preferred partner following a competitive tender from the entire longevity provider market, which was led by the trustee’s advisers Aon and CMS. SCOR was advised by global law firm Eversheds Sutherland.

Insight Investment was appointed as collateral manager and collateral valuation agent for the transaction. 

Frieder Knüpling, SCOR’s chief executive officer for Life & Health, said: “Recent world events have brought life and health risks into sharp focus and now, more than ever, we are seeing demand for stability. We are pleased to be supporting the Balfour Beatty pension trustees in bringing additional security to their pension scheme members.”

Greg Wenzerul, head of longevity risk transfer at Zurich, said: “The continual success of the pension scheme longevity swap market demonstrates the availability and accessibility of such solutions for pension fund trustees looking to optimise their long-term de-risking plans.”

Room for improvement on pension funds’ sustainability strategies  

Large pension schemes have made progress on sustainability, making clear changes to their investment strategies to enhance the sustainability credentials of their portfolios, but there is further room for trustees to strengthen climate reporting to support their commitments, a review of climate disclosures by XPS Pensions Group has found.

The pensions consultancy reviewed climate disclosures of 12 large pension schemes with £320bn in assets under management, made in line with Task Force on Climate-related Financial Disclosures (TCFD) guidance.

These are the first round of such disclosures to be published after doing so was made mandatory for schemes with over £5bn, in October 2021.

The review found that 11 of the 12 schemes reviewed have targets in place linked to net zero or Paris Agreement Alignment, with the majority of these committing to meet that standard by 2050.

The research also showed that nine of these have developed bespoke responsible investment/climate change policies, going beyond the minimum requirement to address the issue in their statement of investment principles.

There is still room for improvement, though, the firm stated. Reflecting the limited availability of data in the market generally, only three schemes made any disclosures relating to Scope 3 (value chain) emissions, and even here coverage was significantly lower than was reported for Scope 1 and 2.

Whilst this is in line with the regulations at this time, expectations are that Scope 3 will become a more mainstream requirement in future.

There was also variation in the degree to which assets of different classes were covered by the disclosures, and while carbon data was readily available on listed equities and corporate bonds, data on other assets – particularly secure income, real assets, and private markets – was scarce.

Alex Quant, head of ESG research at XPS Pensions Group, said: “The pension schemes who undertook TCFD reporting have made good progress on sustainability, setting out how they plan to continue to create value for their members as they look to manage and contribute to the transition to a low-carbon economy. However, setting targets is the easy bit; schemes must make a concerted effort to fully evaluate their current position and the changes in approach needed to deliver the outcomes indicated.”

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