The Barclays Bank UK Retirement Fund has completed a £5bn longevity swap transaction with Reinsurance Group of America (RGA).

The deal was completed with the aim of enabling the scheme to manage a proportion of its longevity risk, while members’ benefits will remain unchanged.

Insight Investment was appointed as collateral manager for the deal and Aon acted as the lead adviser to the Barclays pension scheme.

Commenting on the transaction, Insight Investment client services group head, Serkan Bektas, said: “We are very pleased to partner with the Barclays Bank UK Retirement Fund as it takes the next step on its de-risking journey.

“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.”

Aon risk settlement team principal consultant, Tom Scott, stated that the deal demonstrated the capacity and appetite of the global reinsurance market to take on pension scheme longevity risk.

“Despite the current economic climate, pension schemes can still successfully access the reinsurance market in an effective manner," he noted.

The deal represents the joint fourth biggest longevity swap on record, with the largest being the £16bn transaction between the BT Pension Scheme and PICA in 2014.

Aon senior partner and head of risk settlement, Martin Bird, added: “It's great that Aon was able to bring together all the necessary expertise – including our market-leading demographic analytics, our diverse experience of the risk settlement market and insurance capabilities – to support this significant transaction.

“We worked closely with the trustee of the scheme in tailoring an insurance structure solution to hedge the fund’s specific longevity risk profile following a competitive reinsurance selection process.”

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