More than £2bn of pensioner liabilities of the National Grid Electricity Group of the Electricity Supply Pension Scheme have been covered by an intermediated longevity swap deal with insurer Zurich.
Zurich has reinsured a significant proportion of the longevity risk with Canada Life Reinsurance.
The transaction will protect National Grid against the risk of increasing costs as a result of around 6,000 pensioners and future dependent members living longer than expected.
Jon Carlton, chair of the group trustee, said: “The group trustee is pleased to have been able to significantly reduce one of the key risks that any pension scheme faces, namely the uncertainty on how long members will actually live in practice.”
National Grid’s finance director Andrew Bonfield, added that this represents a significant step in the company’s long-term strategy to manage down the level of pensions risk for National Grid shareholders and electricity consumers.
