Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • July 2014
07

Mercer and Zurich team up to offer longevity hedge for smaller DB schemes

Open-access content Tuesday 15th July 2014 — updated 8.20am, Tuesday 5th May 2020

Mercer has partnered with global insurer Zurich to launch what they claim is a unique longevity hedge product for smaller and mid-sized defined benefit schemes.

The 'streamlined longevity solution' is aimed at DB schemes with pensioner liabilities of £50m or more.

Historically, the complexity and advisory costs associated with a longevity hedge - where an insurer assumes the longevity risk and cost of a section of a scheme's members in return for a premium - have meant that their use in pension scheme de-risking has been restricted to larger schemes of typically £1bn plus of liabilities.

Mercer said insurers and reinsurers have found quoting on smaller schemes too expensive due to the high transaction costs involved and the complexity of each specially made deal.

The new hedge product, which is part of a wider 'SmartDB' service, also launched yesterday, was designed to allow schemes to combine their fiduciary management, actuarial, administration and governance services more easily, the firm said.

Alan Baker, Mercer's head of DB risk, said: 'Demand for DB de-risking solutions is increasing. Combining longevity hedging with our successful fiduciary management services, this is an innovative, practical step opening up a cost-effective DB de-risking approach to scheme of all sizes.

'It's a lower-risk, higher-return solution compared to alternatives like a pensioner buy-in. We have pre-agreed hedging terms with a panel of reinsurers fronted by Zurich, to allow clients access to the best prices because getting them competitive deals is crucial.'

Simon Foster, head of corporate life and pensions, UK and international savings at Zurich, added: 'DB pensions have been facing significant funding challenges in recent years from people living longer and uncertain economic conditions.

'As a result, most have closed to new members, and many have stopped future accrual, with the focus now moving to stabilise existing liabilities. Given the clear market need, and Zurich's strategic focus on providing innovative solutions for corporate customers to better manage their risks, this is a natural extension to our UK proposition.'


This article appeared in our July 2014 issue of The Actuary .
Click here to view this issue

You may also be interested in...

ta

Catastrophe bond issues hit record high in first half of 2014

Insurers issued a record $4.5bn of catastrophe bonds in the second quarter of 2014, according to a report by Aon Benfield Securities.
Thursday 10th July 2014
Open-access content
2

S&P: insurers could fill infrastructure funding gap

Insurers are well-placed to help plug the $500bn per year gap in infrastructure funding between now and 2030, despite Solvency II ‘looming on the horizon’, Standard & Poor’s has said.
Monday 7th July 2014
Open-access content

Retirees 'regret' annuity choice, survey reveals

More than two-thirds of retired people who accepted the annuities offered to them by their pension providers now regret it and would do things differently, a Just Retirement survey has revealed.
Tuesday 15th July 2014
Open-access content

Ros Altmann to speak up for older workers

Pensions expert Ros Altmann is to be the government’s champion for older workers, tasked with making the case for the over-50s within the business community, the Department for Work & Pensions announced today.
Monday 14th July 2014
Open-access content

PMI seeks views on new qualifications

The Pension Management Institute today launched two consultations on new and revised qualifications for pensions professionals, aligned with current industry developments and placing a particular focus on governance.
Wednesday 16th July 2014
Open-access content

Auto-enrolment could see £495bn saved in DC assets, PPI finds

Up to 15 million people will be actively saving in private sector workplace schemes by 2030, with up to £495bn in defined contribution assets, the Pensions Policy Institute has found.
Thursday 17th July 2014
Open-access content

Latest from Reinsurance

Natural catastrophes drive insured losses of $38bn

Natural catastrophes drive insured losses of $38bn

Unprecedented flooding in Australia and South Africa saw total insured losses from natural catastrophes reach $35bn (£29bn) in the first half of 2022, Swiss Re has found.
Wednesday 10th August 2022
Open-access content
Insured losses from natural disasters rise above 21st century average

Insured losses from natural disasters rise above 21st century average

Natural disasters resulted in around $39bn (£32bn) of insured losses during the first six months of this year, which is 18% higher than the 21st century average of $33bn.
Thursday 28th July 2022
Open-access content
Utilities struggling to insure new coal power, report claims

Utilities struggling to insure new coal power, report claims

New coal power capacity is becoming increasingly difficult to insure outside of China, with utilities now turning to inexperienced companies for coverage.
Wednesday 8th June 2022
Open-access content

Latest from July 2014

Independent DC audit panel issues progress report

The independent panel convened to probe the defined contribution pensions market has confirmed it will review all workplace pensions sold before 2001 and all post-2001 DC plans sold with fees over 1% per annum.
Thursday 31st July 2014
Open-access content

Towers Watson: value of 'at-retirement' market set to hit £50bn

The UK ‘at retirement’ market will triple to £50bn by 2023, pushed by substantial annuity sales, according to analysis by Towers Watson.
Friday 25th July 2014
Open-access content

IFoA and FRC issue statement on actuarial standards

The Institute and Faculty of Actuaries (IFoA) and the Financial Reporting Council (FRC) have issued a joint statement on actuarial standards.
Thursday 24th July 2014
Open-access content

Latest from no_opening_image

TPR publishes coronavirus guidance

The Pensions Regulator (TPR) has published guidance to help UK pension trustees, employers and administrators deal with the financial and regulatory risks posed by coronavirus.
Monday 23rd March 2020
Open-access content
web_p24_cat-and-fish_iStock-483454069.png

Sensitivity analysis: swimming lessons

Silvana Pesenti, Alberto Bettini, Pietro Millossovich and Andreas Tsanakas present their alternative approach to sensitivity analysis
Wednesday 4th March 2020
Open-access content
ta

IFoA adjudication panel: Mr Jack Wicks, student

On 30 October 2019 the Adjudication Panel considered an allegation of misconduct against Mr Jack Wicks (the respondent).
Friday 28th February 2020
Open-access content

Latest from 07

Independent DC audit panel issues progress report

The independent panel convened to probe the defined contribution pensions market has confirmed it will review all workplace pensions sold before 2001 and all post-2001 DC plans sold with fees over 1% per annum.
Thursday 31st July 2014
Open-access content

Towers Watson: value of 'at-retirement' market set to hit £50bn

The UK ‘at retirement’ market will triple to £50bn by 2023, pushed by substantial annuity sales, according to analysis by Towers Watson.
Friday 25th July 2014
Open-access content

IFoA and FRC issue statement on actuarial standards

The Institute and Faculty of Actuaries (IFoA) and the Financial Reporting Council (FRC) have issued a joint statement on actuarial standards.
Thursday 24th July 2014
Open-access content
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Shape the Future of Insurance

London (Central)
£ excellent package
Reference
149090

Senior Pricing Actuary - Life Reinsurance

London (Central)
£ excellent
Reference
149089

Insurance Investment Leadership Opportunities

Flexible / hybrid with 2 days p/w office-based
£ dependent upon experience
Reference
149088
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ