Investment - Articles - Willis Towers Watson in AXA Pension longevity swap

Willis Towers Watson has announced that it was the sole adviser to the AXA UK Group Pension Scheme on its £3 billion longevity swap with Hannover Re to manage longevity risk in the Scheme. The longevity swap is a market first, with over 95% of the 16,000 members covered being non-pensioners.

 Shelly Beard, Senior Director for Transactions at Willis Towers Watson and lead adviser, said: “It’s always a pleasure to work with a client that embraces innovation in the way AXA and the Trustees do. This is the third longevity swap we have partnered with the Scheme on over the last 6 years. The speed at which this transaction was completed, even with the additional structuring considerations from including non-pensioners, demonstrates that once an initial longevity swap has been completed, additional transactions can be completed quickly and efficiently. The collaborative approach taken by the AXA UK, Linklaters and Hannover Re teams was also incredibly beneficial to the project.

 “As well as removing the majority of the Scheme’s remaining longevity risk, the inclusion of non-pensioners is very helpful for the Scheme’s investment strategy as it provides increased cashflow certainty. Whilst pensioner longevity swaps have become relatively common place in the UK de-risking market since we led the first deal in 2009, this is the first whole of life longevity swap covering a material volume of non-pensioners and we expect significant appetite from other pension schemes to replicate the structure.

 “More widely, the longevity swap market remains buoyant and represents an opportunity for pension schemes to manage a material risk whilst retaining the flexibility to achieve the required investment returns to complete their journey plan.”

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