Yorkshire and Clydesdale Bank Pension Scheme enters into £1.6bn longevity hedge with Pacific Life Re via Zurich Assurance Ltd

2 May 2023

The Yorkshire and Clydesdale Bank (YCB) Pension Scheme has today announced a longevity swap transaction with Pacific Life Re International Limited (“PL Re”) and Zurich Assurance Ltd (“ZAL”) to manage longevity risk in relation to c£1.6 billion of pensioner liabilities. The arrangement provides long term protection to the Scheme against costs resulting from pensioners or their dependants living longer than currently expected, enhancing security for Scheme members.

The longevity insurance policy is structured as an insurance arrangement between the Trustee and ZAL, and a back-to-back reinsurance arrangement between ZAL and PL Re using ZAL’s pass-through solution. Under this pass-through structure PL Re assumes 100% of the longevity risk associated with around 9,000 members of the Scheme and the Trustee and PL Re take on mutual credit risk exposure to each other. The arrangement will form part of the Scheme’s investment portfolio and will provide income to the Scheme in the event that members live longer than currently expected.

Source: wtw