BT completes £16bn longevity deal

摘要

BT has become the latest in a string of pension schemes to hedge increases in life expectancy by transferring its longevity risk to a third-party. In the largest such transaction to-date, the pension scheme agreed a deal that transfers 25% of its total exposure to longevity improvements, covering £16bn of its liabilities. The insurance-based solution came despite concerns that the market was approaching a capacity crunch for such transactions. As part of the deal, the scheme's trustee set up a wholly-owned insurance company to transfer the risk, which was in turn reinsured by the Prudential Insurance Company of America.