Pensions - Articles - Mercer advises ITV pension scheme trustees on longevity swap

 ITV plc (‘ITV’) and the Trustee of the ITV Pension Scheme announce today that they have removed a significant proportion of the risk associated with the scheme’s defined benefit pensioner population living longer than expected. Advised by Mercer and other companies, the Trustees of the pension scheme have entered into a longevity swap contract with Credit Suisse.

 The longevity deal is another measure implemented as part of the long-term strategy to manage the risks and uncertainties associated with the scheme. Mercer advised the trustees of the scheme providing analysis on the pricing of the transaction, benefits to be covered and due diligence.

 According to Frank Oldham, Senior Partner at Mercer, “This is another welcome step in the management of risks relating to ITV’s pension obligations and therefore should help to increase the security of members’ benefits. We’re very pleased to have been able to help ITV.”

 Andrew Ward, a Principal and head of longevity swap consulting at Mercer, commented, “This is another example of a company and scheme recognising the risks posed by uncertainty over future life expectancy and the potential opportunities that exist to now manage them. We’re seeing increasing interest in this area and are working on a number of similar transactions.”

 Mercer believes that this trend may continue further in the context of recent market volatility as longevity swaps offer a way of managing risk without locking into underfunding and lower yielding assets.