RGA in £5bn longevity swap for Barclays UK pension scheme

Reinsurance Group of America (RGA) has provided the Barclays Bank UK Retirement Fund, a pension scheme and fund managing assets on behalf of UK employees of the bank, with a UK £5 billion longevity swap transaction.

The Barclays pension explained today that entering into the longevity swap arrangement with global life and annuities focused reinsurance player RGA will help to ensure it can meet obligations to its members and reduces risk related to increasing life expectancy.

By transferring the longevity risk associated with a significant number of its members, the Barclays Bank UK Retirement Fund is able to gain a more predictable funding outlook, leveraging the appetite of a large global reinsurance firm to increase the security of its benefit provision to pensioners going forwards.

Insight Investment, a global asset and risk manager with UK £731.5 billion under management said this morning that it has been appointed as collateral manager for the longevity swap transaction between the Barclays Bank UK Retirement Fund and RGA.

“We are very pleased to partner with the Barclays Bank UK Retirement Fund as it takes the next step on its de-risking journey,” Serkan Bektas, Head of Insight’s Client Solutions Group explained. “This transaction is particularly timely given that longevity risk is receiving increased focus among pension schemes and we are well positioned to work closely with our clients who are seeking to maximise certainty of outcome and achieve greater overall investment efficiency in their risk management frameworks.”

The Barclays UK pension fund has been working to reduce its deficit and improve its funding levels for a while now, with this longevity swap now set to play a key role in securing the benefits future for its pensioners.

In 2020 there have been a number of large pension longevity swap arrangements and even more longevity reinsurance transactions as the market remained active despite the influence of the pandemic.

We’ve got UK £21.1 billion of longevity swaps listed in our deal directory for 2020, making this the biggest year in the longevity swaps market for some time.