Pension Scheme secures swap deal with Hannover Re

The longevity swap deals with £3bn of pension liabilities
It covers pensions that may come into payment after 31 March 2019 within the AXA UK Group Pension Scheme
When combined with previous swaps, nearly 93% of the pension scheme’s liabilities are now protected against the chance of members living longer than anticipated

The AXA UK Group Pension Scheme has entered into a longevity swap with Hannover Re to protect £3bn of mostly deferred pension liabilities held in its Defined Benefit plan.

The arrangement provides long-term protection to the Scheme against the costs associated with pensioners living longer than expected once they come into payment. The coverage of a material number of deferred members is thought to be a first within the UK pensions market.

The swap, which closed on 27 February 2021, will form part of the Scheme’s investment portfolio, building upon previous transactions undertaken to protect pensions that had already come into payment by 31 March 2019.

The Trustee and AXA appointed Willis owers Watson and Linklaters LLP as lead advisors to the transaction.

I am happy that the AXA UK Group Pension Scheme has taken a further important step to ensure that our scheme members’ benefits are strongly secured against improvements in life expectancy. De-risking the scheme will benefit all of our DB scheme members and will not affect any payments to members as they will continue to receive their pension as normal. This is a very positive step in providing additional security of members’ pensions.

Stephen Yandle, Chair at AXA UK Pension Trustees

We are pleased to continue to support the AXA UK Group Pension Scheme by leveraging our internal technical and operational expertise to secure members’ benefits. The collaboration with Hannover Re in implementing a deferred longevity swap, believed to be the first transaction of its type entered into by a pension fund trustee, assists in stabilising the capital position of AXA UK and furthers our commitment to proactively managing our non-core business risks.

Vikram Chatrath, Head of Pension Strategy at AXA UK

We have successfully teamed up with the AXA UK Group Pension Scheme and AXA UK to provide protection for its scheme members not yet in payment. We are more than happy to support our clients with risk capacity in areas where our clients particularly need our protection. Our long term expertise in the longevity market enables us to provide solutions for market segments otherwise difficult to place. This transaction proves once again Hannover Re’s capability and commitment to grow its global longevity business.

Claude Chèvre, Executive Board Member at Hannover Re

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About AXA UK

AXA Insurance UK plc registered in England and Wales under registered number 078950 and authorised by the Prudential Regulation Authority and regulated by the Prudential Regulation Authority and the Financial Conduct Authority under Financial Conduct Authority registration number 202312. Registered office is 20 Gracechurch Street, London, EC3V 0BG.

AXA UK is part of the AXA Group, a worldwide leader in insurance and asset management, with 147,000 employees serving 94 million clients in 50 countries. In 2023, IFRS revenues amounted to Euro 102.7 billion and underlying earnings to Euro 7.6 billion. AXA had Euro 844 billion in assets under management as of December 31, 2023.

In the UK & Ireland, AXA operates through a number of business units including: AXA Insurance, AXA Health and AXA Ireland. AXA UK & Ireland employs around 10,000 staff.

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AXA UK Pension Scheme secures £3bn deferred longevity swap deal with Hannover Re