The Merchant Navy Officers Pension Fund (MNOPF) has converted its pensioner longevity swap into a £1.6bn buy-in with the Pension Insurance Corporation (PIC).

The move from an existing pensioner longevity swap with Pacific Life Re secures the pensions of around 14,000 members of the scheme.

PIC said the deal was the third conversion of a longevity swap to a buy-in that it had been involved in, “signifying a growing appetite in the market for these types of deals”.

The trustee was advised by Willis Towers Watson and received additional legal advice from Baker McKenzie, while PIC was advised by CMS.

MNOPF chair, Rory Murphy, commented: “This buy-in enables us to more effectively manage the risks faced by the fund as a whole, providing greater certainty to members that their benefits will continue to be paid in full from the fund.

“It is also good news for employers in the maritime and shipping industry, who have already saved many millions in deficit contributions over recent years as a result of our improved funding position.”

PIC head of origination structuring, Uzma Nazir, noted: “We are delighted that the MNOPF trustee chose to work with PIC and ultimately secure this tranche of their members’ benefits with us.

"It takes expertise to complete a conversion of a longevity swap to a buy-in and all parties worked well together to get the trustee’s desired goal. A great outcome for all.”

Willis Towers Watson senior director, Shelly Beard, stated: “Novations of longevity swaps are becoming increasingly commonplace, and this one proved to be particularly quick and efficient because the 2014 longevity swap was structured through a Guernsey-based captive.

“It was great to partner with PIC, Pacific Life Re and the trustee to implement another ground-breaking transaction at attractive pricing.”

The MNOPF is an industry-wide pension scheme established in 1937 to provide retirement and death benefits for shipping companies’ officers.

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