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Recent longevity swap transactions are just the start of a busy 2012 in risk settlement deals says Aon Hewitt
Consultant was lead adviser on Pilkington longevity swap

LONDON, 9 January 2012 – Aon Hewitt, the global human resource consulting and outsourcing business of Aon Corporation (NYSE:AON), has said today's announcement that the Pilkington Superannuation Scheme has entered into a longevity swap of around £1 billion with Legal & General (on which the lead advisers were Aon Hewitt), underlines a renewed focus on longevity risk management and the likelihood of a very active risk settlement market during 2012.

Market Outlook for 2012
Martin Bird, managing principal at Aon Hewitt and head of the Risk Settlement Group said:

"The end of 2011 and now the start of 2012 have seen a flurry of activity on large-scale longevity swap transactions, with £6 billion of deals announced, including Rolls Royce/Deutsche Bank and Pilkington/Legal & General (L&G). In addition, we have also seen a pick-up in activity in the buy-in market, including a £1.1billion deal for Turner & Newall/L&G and one of £800m for Uniq/Rothesay Life.

"This activity built up through 2011 and highlights the ongoing focus on managing pension risk, with both trustees and sponsors aiming to protect funding positions, manage cash contributions and reduce the volatility arising from significant legacy pension liabilities.”

Martin Bird continued:
"The longevity swap market in particular is really emerging as a major influence and we now have a critical mass of deals announced.  With that we are starting to see some real standardisation in deal structure, which is helping to make these deals accessible across a much wider range of schemes."

Aon Hewitt has invested heavily in building up its market-leading Risk Settlement Group, which helps clients to navigate through the complex risk settlement market and to identify transactions that are appropriate for specific needs and objectives. 

Martin Bird said:

"With the deals on which we have worked - both during 2011 and before - we can claim to be the leading advisor in the longevity swap market, and we look forward to helping more clients successfully execute risk settlement deals during the course of 2012. The overall risk settlement market, including longevity swaps, buy-ins and a number of other innovative means of transferring risk to the insurance and capital markets, is helping schemes and sponsors to take a much more pro-active approach to managing pension risk."

Longevity deals – the recent history
Pilkington joins ITV, Rolls-Royce and British Airways in having announced a large longevity swap transaction. Together with the swaps transacted by Babcock, BMW, RSA and the Royal County of Berkshire during 2009 and 2010, the total number of pension fund longevity swaps has risen to 12, covering approximately £16 billion of pension scheme liabilities.





Approx size


January 2012


Legal & General

£1 Bn

Pensioner bespoke longevity swap

December 2011

British Airways

Goldman Sachs / Rothesay Life


Pensioner bespoke longevity swap

November 2011


Deutsche Bank


Pensioner bespoke longevity swap

August 2011


Credit Suisse


Pensioner bespoke longevity swap

February 2011


J P Morgan


Non-pensioners index based longevity hedge

July 2010

British Airways

Goldman Sachs / Rothesay Life


Synthetic buy-in (longevity swap plus asset swap)

February 2010


Abbey Life / Deutsche Bank


Pensioner bespoke longevity swap

November 2009

Royal Berkshire

Swiss Re


Pensioner bespoke longevity swap

July 2009

RSA Insurance group

Goldman Sachs / Rothesay Life


Synthetic buy-in (longevity swap plus asset swap)

May 2009


Credit Suisse


Pensioner bespoke longevity swap (3 schemes)


Matt Wilmington, principal at Aon Hewitt and lead adviser on the Rolls-Royce and Pilkington transactions added:

"Both the Rolls-Royce and Pilkington trustees entered into their longevity transactions as a way of improving the security of all the members' benefits. In both cases, we worked closely with the trustees to identify an appropriate approach and deal structure.

"Longevity swaps are attractive for many schemes as they specifically remove longevity risk, without disturbing schemes' existing investment arrangements. This can be particularly helpful where schemes are relying on their asset portfolios to deliver returns to fund ongoing contributions and to help address existing funding deficits. However, continued improvements in life expectancy and the associated longevity risk are not something which many schemes and sponsors are prepared to chance, and so having the ability to remove that risk on cost effective terms has been a key driver in a number of deals.”

Matt Wilmington added:
"But the market and the ways to approach these issues are evolving. The ability to add longevity swaps to an existing liability-driven investment portfolio in order to create a synthetic buy-in solution in-house, means that schemes have a real alternative to insurance buy-in solutions.  That change should be helpful in creating a genuinely competitive market for risk settlement deals."

Lynda Whitney from Aon Hewitt's Risk Settlement Group and lead adviser to the Trustee of the Pilkington Superannuation Scheme said:

"As lead advisers on the Pilkington transaction we worked with the Trustee of the Pilkington Superannuation Scheme to help them to understand and then reduce the longevity risk to their scheme. It is a key step in the trustee strategy to reduce risk and to help ensure the security of members' benefits" 

- Ends -

About Aon Hewitt
Aon Hewitt is the global leader in human capital consulting and outsourcing solutions.  The company partners with organisations to solve their most complex benefits, talent and related financial challenges, and improve business performance.  Aon Hewitt designs, implements, communicates and administers a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies.  With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and their employees.  For more information on Aon Hewitt, please visit

About Aon
Aon Corporation (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 61,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit for more information on Aon and to learn about Aon's global partnership and shirt sponsorship with Manchester United


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Colin Mayes
Aon Hewitt
01372 733689


Quintin Keanie
Capital MSL
020 7255 5154


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