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Travers Smith advises Willis Pension Scheme on £1 billion longevity swap transaction with Munich Re


Travers Smith LLP has advised Willis Pension Scheme on a longevity swap transaction with Munich Re to manage longevity risk in relation to circa £1 billion of pensioner liabilities. The arrangement covers pensions in payment in the Scheme and provides long term protection for the Scheme against additional costs resulting from pensioners or their dependants living longer than expected.

The transaction covers around 3,500 Scheme members. The longevity risk has been transferred to the reinsurer via a Guernsey based Captive Insurance Company fully owned by the Trustee of the Scheme, established under Willis Towers Watson Guernsey ICC Limited. This is part of Willis Towers Watson’s Longevity Direct solution which allows pension schemes to use a ‘ready-made’ incorporated cell company to access the reinsurance market.

The Travers Smith cross-disciplinary team was led by Finance Partner, and a member of the firm's Pensions Sector Group, Sebastian Reger with support from Associate Mike Fallow and trainee Tom Purkiss. Additional advice was provided by Head of Pensions Daniel Gerring and Senior Associate Chris Widdison.

Sidley Austin LLP provided legal advice to Munich Re.

Travers Smith's Pensions Sector Group comprises dedicated pensions partners, as well as other lawyers across the firm who routinely advise clients in the pensions sector. Their combined expertise covers the full range of technical legal specialisms, including investment funds, derivatives and structured products, financial services and markets, corporate finance, private equity, finance, tax, employment, outsourcing and commercial contracts, data protection, and dispute resolution. A significant area of work for the Pensions Sector Group is a growing portfolio of longevity, buy-in and buy-out transactions for pension schemes.

Travers Smith's Partner Sebastian Reger commented: "Lawyers from Travers Smith's multi-disciplinary Pension Sector Group are proud to be part of the team of advisers and Trustees which delivered this land-mark transaction for the Scheme."

Ian Aley, Head of Transactions at Willis Towers Watson and lead adviser, said: “The longevity swap market is currently very buoyant and represents an opportunity for pension schemes such as the Willis Pension Scheme to manage a material risk whilst retaining the flexibility to achieve the required investment returns to complete their journey plan. Completing this transaction despite some challenging circumstances following the recent lockdown demonstrates how collaborative working can deliver outstanding results.”

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