AstraZeneca agrees pensions longevity swap

AstraZeneca has agreed a longevity swap for its defined benefit pension scheme.

The arrangement provides hedging against the longevity risk of around 10,000 of the scheme’s current pensioners and covers £2.5 billion of liabilities.  

The longevity swap has been agreed with Deutsche Bank, and advised by Aon Hewitt.

Matt Wilmington, partner at Aon Hewitt, said: “We led the advice to a joint working group of the trustee alongside corporate representatives and the trustees’ regular advisors on this significant transaction.  

“This enabled a clear decision-making framework to be established regarding the price and structural terms of the transaction, allowing the trustee to put in place a robust arrangement at an acceptable price.

“It was clear during the negotiations for this transaction that the capacity and appetite of the global reinsurance market to take on pension fund longevity risk is ever increasing.

“Together with Deutsche Bank, we ran a competitive process, including the established reinsurers, as well as a number of new market entrants, which has enabled the fund to transact at the best available terms.”