Case study: Berkshire sets up longevity insurance

The Royal County of Berkshire was one of the first local authorities in the UK to hedge its longevity risk. Nick Greenwood, pension fund manager for the Royal County of Berkshire Pension Fund, wanted to reduce volatility around the scheme’s assets and liabilities, making the employer contributions more stable and predictable.†

On the liability side, one way to do this was to reduce the impact of the scheme’s pensioners living longer than expected, so the pension fund set up a longevity insurance deal with reinsurance giant Swiss Re.

The Financial Services Compensation Scheme told the pension fund that in the unlikely event of anything happening to Swiss Re, it would pass on the contract to another insurer on the same terms.

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