The trustee of the Barclays Bank UK Retirement Fund (UKRF) has insured £7bn of liability against longevity risk, with reinsurance provided by an insurance subsidiary of Prudential Financial, Inc. (PFI).

The transaction aims to protect the UKRF from the financial risk of any unexpected increase to life expectancy for current pensioners.

Combined with the £5bn longevity swap agreed by UKRF in 2020, this means that over three-quarters of current pensioners’ longevity risk is now hedged, continuing the trustee’s journey to make the UKRF more secure by reducing risk.

Members will see no changes their benefits, however, which will continue to be paid directly by the UKRF trustee.

Insight Investment acted as collateral manager for the deal, while Aon was the lead adviser to UKRF on the transaction, Allen & Overy provided legal counsel, and Willkie Farr & Gallagher served as legal counsel to PFI.

Trustee chair, Peter Goshawk, highlighted the second longevity transaction as "an important part of our continued de-risking of the UKRF and improves benefit security for all members".

“The success of the transaction is down to the collaboration and support of Barclays and the hard work of Barclays’ pension team, PFI and our advisers, all of whom I would like to thank," he continued.

Adding to this, PFI retirement strategies business head of international reinsurance, Rohit Mathur, commented: “We are pleased to partner with the trustee of the Barclays Bank UK Retirement Fund on a longevity transaction that helps to meet the client’s risk management objectives.

"It demonstrates PFI’s continued leadership and commitment to the global pension and longevity risk transfer market.”

Insight Investment head of client solutions, Serkan Bektas, also noted that, over the past 10 to 15 years, UK pension scheme trustees have acted to "substantially hedge interest rate risk and inflation risk and are now increasingly focused on longevity risk".

"The robust and efficient management of collateral and associated liquidity has received particular attention in recent months," Bektas added.

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