Lafarge pension plan completes longevity swap

Lafarge UK Pension Plan has entered into a longevity swap with Munich Re, reducing what has been identified as the largest individual risk to the plan, it has revealed.

It its February newsletter PensionsTalk, Lafarge UK Pension Plan chairman, Roger Mountford, said the deal, completed in August 2018, was necessary as the length of time people are expected to live in retirement has “increased significantly”.

Despite life expectancy at birth remaining stable between 2015-2017, at 79.2 for males and 82.9 for females, it has risen dramatically over the past decade, according to the Office for National Statistics figures.

Commenting on the deal, Mountford said: “It is not easy to predict future life expectancy accurately – current estimates of longevity may change in future and members may of course live longer than expected: this creates the longevity risk.”

The plan, consisting of two large defined benefit schemes as well as a smaller defined contribution schemes, had a combined value of £3.4bn at 20 June 2018 and a total of 26,129 members.

According to the latest figures, it paid out benefits totalling £159.6m in the year to 30 June 2018.

The group also said it has begun work on its triennial actuarial valuation, with the results expected to be available “towards the end of the year”.

Mountford added that two of its member nominated directors (MND) are approaching the end of their term, meaning members will now nominate another member for the position.

“It is not easy to predict future life expectancy accurately – current estimates of longevity may change in future and members may of course live longer than expected: this creates the longevity risk,” Mountford added.

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