On the go: The trustee of the Lloyds Bank pension schemes has agreed to a £10bn longevity swap deal with Scottish Widows and Pacific Life Re.
The deal covers pensioner liabilities in the Lloyds Bank Pension Scheme No. 1, Lloyds Bank Pension Scheme No. 2 and HBOS Final Salary Pension Scheme, and is the second-largest longevity swap in the UK, according to Willis Towers Watson.
The arrangement is structured as an insurance with Scottish Widows and corresponding reinsurance with Pacific Life Re, which will be responsible for the schemes’ longevity risk.
The trustee undertook a full market review, which saw a number of insurers and reinsurers putting forward proposals that were analysed by the trustee and its advisers.
Scottish Widows and Pacific Life Re were selected because their respective propositions offered the best balance of financial security, value and underwriting strength, the trustee stated.
Harry Baines, chair of the Lloyds Banking Group Pensions Trustees, noted that the deal “will protect the schemes from the financial risk of an unexpected increase in life expectancy and make the schemes more secure to the benefit of all members”.
Scottish Widows was advised by Eversheds Sutherland. Lloyds Banking Group Pensions Trustees received transaction advice from Willis Towers Watson and Allen & Overy. Pacific Life Re was advised by CMS.
