ScottishPower has closed a £1 billion longevity insurance swap with Abbey Life Assurance Company Limited, covering the liabilities of around 4,000 members and dependents of the Manweb Group of the Electricity Supply Pension Scheme.
The longevity swap is the second completed by ScottishPower in recent years. In December 2014 the company entered into a similar transaction, covering £1.9bn of liabilities, for the SPPS pension scheme (ScottishPower’s other defined benefit scheme).
The hedge is designed to safeguard the pension arrangements of the Scheme’s members, by ensuring ScottishPower is protected against the risk of the increased liabilities that would arise if members were to live longer than currently expected.
The removal of this risk via the longevity insurance swap is another step in the management’s and the Trustee’s ongoing strategy to protect pension scheme members.
Hamish Watson, UK HR Director at ScottishPower commented: “We are extremely satisfied with the completion of this hedge, and we have now protected around £3 billion of pensions liabilities in recent years. This transaction demonstrates ScottishPower’s commitment to the security of the benefits of our pension scheme members and is an important step in our active strategy to manage pension risk.”
Graham Wardle, Chairman of the Trustee, said: “The Trustee is delighted with the outcome of this transaction after months of work with ScottishPower, our advisers led by Mercer, and Abbey Life. We are pleased to protect against this uncertainty in the scheme, thus providing increased security to our members.”
ScottishPower Press Office: 0141 614 4535