The UBS (UK) Pension and Life Assurance Scheme has extended its longevity hedge by £500m (€580m) including 50% of its deferred members.
The transaction adds to the £1.4bn longevity swap completed in July 2020 and the extended swap now covers roughly two-thirds of its defined benefit (DB) liabilities, it was announced.
The transaction was arranged with Zurich Assurance as the insurer, with The Canada Life Assurance Company acting as the reinsurer.
Allen & Overy acted as legal advisers to the trustee, while Mercer was the lead commercial and investment adviser to the trustee.
The longevity swap was innovatively and efficiently adapted to cover the scheme’s DB deferred members over age 60 – a market first – as well as the unhedged DB current pensioners.
The swap will protect the scheme against the risk of the covered members or their covered dependents living longer than expected.
Richard Hardie, chair of the trustee to the UBS scheme, said: “This transaction is a significant milestone in our plan to reduce the uncertainties facing the DB section of our scheme as it approaches maturity.”
Gareth Dobson, general manager of The Canada Life Assurance Company’s Barbados Branch, said: “This transaction further demonstrates the benefits and flexibility of longevity risk transfer in providing long-term protection to the UBS pension scheme members, including deferred members.”