This transaction helps protect the UKRF from the financial risk of any unexpected increase to life expectancy for current pensioners. In addition to the £5 billion the UKRF transacted in 2020, this results in over three-quarters of current pensioners’ longevity risk now being hedged. This continues the Trustee’s journey to make the UKRF more secure for the benefit of all members by reducing risk. As before, members will see no changes to their benefits, which will continue to be paid directly by the UKRF Trustee.
The transaction makes assumptions about how long pensioners will live. If pensions are paid out for longer than expected, then the transaction would provide income to the UKRF from Prudential via the reinsurance.
Peter Goshawk, the chair of the Trustee, said, “This second longevity transaction is an important part of our continued de-risking of the UKRF and improves benefit security for all members. The success of the transaction is down to the collaboration and support of Barclays and the hard work of Barclays’ pension team, Prudential, and our advisers, all of whom I would like to thank.”
Rohit Mathur, head of international reinsurance for the Retirement Strategies business at Prudential, said, “We are pleased to partner with the Trustee of the Barclays Bank UK Retirement Fund on a longevity transaction that helps to meet the client’s risk management objectives. It demonstrates Prudential’s continued leadership and commitment to the global pension and longevity risk transfer market.”
Aon PLC (NYSE: AON), was the lead adviser to UKRF on the transaction, Allen & Overy provided legal counsel to UKRF. Willkie Farr & Gallagher served as legal counsel to Prudential on the transaction.
Source: Prudential
