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Press Release

Willis Pension Scheme enters into £1bn longevity hedge

Pensions Risk Solutions|Retirement

June 30, 2020

LONDON, 30 June 2020 – The Willis Pension Scheme (“the Scheme”) has entered into a longevity swap transaction with Munich Re to manage longevity risk in relation to c£1 billion of pensioner liabilities.  The arrangement covers pensions in payment in the Scheme and provides long term protection for the Scheme against additional costs resulting from pensioners or their dependants living longer than expected. 

The transaction covers around 3,500 Scheme members.  The longevity risk has been transferred to the reinsurer via a Guernsey based Captive Insurance Company fully owned by the Trustee of the Scheme, established under Willis Towers Watson Guernsey ICC Limited.  This is part of Willis Towers Watson’s Longevity Direct solution which allows pension schemes to use a ‘ready-made’ incorporated cell company to access the reinsurance market.

Ian Aley, Head of Transactions at Willis Towers Watson and lead adviser, said:

Completing this transaction despite some challenging circumstances following the recent lockdown demonstrates how collaborative working can deliver outstanding results”

Ian Aley,
Head of Transactions Willis Towers Watson

“The longevity swap market is currently very buoyant and represents an opportunity for pension schemes such as the Willis Pension Scheme to manage a material risk whilst retaining the flexibility to achieve the required investment returns to complete their journey plan. Completing this transaction despite some challenging circumstances following the recent lockdown demonstrates how collaborative working can deliver outstanding results”

Peter Routledge, Chair of the Willis Pension Scheme, said:

“I am delighted that the Trustee has taken a first and significant step to ensure that our members’ benefits are secured against future improvements in life expectancy, supplementing the Trustee’s wider risk management program to protect the Scheme against investment and demographic volatility. The transaction was concluded effectively, enabling us to access the longevity swap markets whilst pricing was attractive relative to Scheme funding. Having considered the options for accessing the reinsurance market we concluded that Longevity Direct offered the best value solution for our Scheme.”

Martin Lockwood, Head of Longevity at Munich Re, said:

“This transaction demonstrates Munich Re’s experience and commitment in the Longevity market and its ability to adapt to a challenging working environment."

Sebastian Reger, Partner at Travers Smith and legal advisers, said:

"Lawyers from our multi-disciplinary Pension De-Risking Practice are proud to be part of the team of advisers and Trustees which delivered this land-mark transaction for the Scheme." 

Martin Membery, Partner at Sidley Austin, said:

“Lawyers from the Sidley insurance and finance teams have been working seamlessly with Munich Re on the structuring and successful execution of this complex transaction.”

Willis Towers Watson led the advice on the transactions, with Travers Smith LLP, Carey Olson (Guernsey) LLP and Hengeler Mueller providing legal advice to the Trustees. Lincoln Pensions Limited advised on the reinsurer financial strength. Sidley Austin LLP provided legal advice to Munich Re.

Halfway through 2020, Willis Towers Watson has been the lead adviser on both longevity swap transactions amounting to £11bn and £3.1bn of bulk annuity transactions across 13  pension plans that have completed this year.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas – the dynamic formula that drives business performance. Together, we unlock potential.

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