27 July 2020

Carey Olsen advises Willis Pension Scheme trustees on £1 billion longevity risk transfer

Carey Olsen has advised the trustees of the Willis Pension Scheme (the Scheme) as part of the longevity swap transaction with Munich Re to manage longevity risk in relation to £1 billion of pensioner liabilities within the Scheme.

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. In total, 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.

The Carey Olsen team advising the Scheme's trustees was led by partner Konrad Friedlaender, assisted by counsel Andrew Munro. Carey Olsen worked alongside lead counsel Travers Smith and Hengeler Mueller.

Konrad said: "Management of longevity risk is a key consideration for pension trustees with life expectancy steadily increasing around the world and we were delighted to advise the trustees of the Willis Pension Scheme in this matter. The longevity swap transaction solution used here, utilising a Guernsey incorporated cell company (ICC), has become a well-trodden path in recent years because of the flexibility underpinning Guernsey's ICC legislation and we expect to see further activity in this area in the near future."

Willis Towers Watson Guernsey ICC Limited is part of Willis Towers Watson's Longevity Direct solution which allows pension schemes to use a 'ready-made' ICC to access the reinsurance market.