AXA U.K. Group Pension Scheme, London, completed a £2.8 billion ($4.4 billion) longevity swap with Reinsurance Group of America for the defined benefit section of its retirement plans.
The swap covers about half of the pension fund’s liabilities. A spokeswoman for AXA U.K. said pension fund assets are about £4.5 billion.
The deal covers 11,000 members. The swap will form part of the pension fund’s investment portfolio, providing income in the event that members live longer than is currently expected.
“By significantly derisking the scheme, this will benefit all our DB scheme members and will not affect any payments to members as they will continue to receive their pension as normal,” said Stephen Yandle, chairman, AXA U.K. Pension Trustees Ltd., in a news release.
The spokeswoman said there are no plans at present to carry out an annuity buyout. “However, AXA, in connection with the trustees, is continuously looking for ways to manage its exposure to risk on the pension fund, with wider derisking strategies in place both on the asset and liability side,” she said in an e-mail.
Towers Watson and Linklaters were lead advisers to the trustees and company.