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H E A LT H W E A LT H C A R E E R
M E R C E R P E N S I O N R I S K E X C H A N G E ®
L O N G E V I T Y S W A P S
I N T R O D U C I N G L O N G E V I T Y S W A P S C A P A B I L I T I E S O N M E R C E R P E N S I O N R I S K E X C H A N G E ®
• Access the information you really need to set derisking strategy for your UK defined benefit pension scheme.
• Gather initial estimated longevity swap pricing, based on actual scheme profile and informed by reinsurers.
• Receive scheme-specific pricing from reinsurers for a longevity swap transaction and observe how it develops over time.
• Obtain a consolidated view of pricing that is produced for you directly by reinsurers, not estimated by your advisors, along with financial metrics to evaluate the options.
• Place the scheme in the ‘shop window’ and be in a position to act fast to avoid missing opportunities (including potential bulk annuity deals, if relevant).
Sponsoring employers and trustees need and value robust information on their defined benefit (DB) pension scheme’s true financial position and how it is developing over time. They need this information to be up-to-date, produced regularly and provided at low cost.
This becomes even more important when a buy-in, buyout or longevity swap is being considered. Sponsoring employers and trustees need to know that they are doing the right thing, at the right time, in managing the risk attached to their pension obligations. They require high-quality, regularly produced information on transaction pricing and terms.
The UK pension risk transfer market has not always lived up to these ideals. On occasion, transaction pricing has been difficult to obtain quickly and robustly. Regular monitoring of accurate pricing has tended to require a bespoke approach, which has
sometimes not been easy to maintain for lengthy periods.
Mercer Pension Risk Exchange addresses these problems. As well as bringing clarity to the UK pension buy-in and buyout market since 2015, the Exchange now provides similar transparency and insight to the longevity swap market. The Exchange gathers the information that stakeholders need, presented in a coherent way online, instilling the confidence required for sponsoring employers and trustees to act decisively.
The Exchange helps sponsoring employers and trustees of UK DB schemes act with confidence by sourcing pricing and terms directly from reinsurers on a periodic basis, enabling thorough consideration of a potential longevity swap.
M E R C E R P E N S I O N
R I S K E X C H A N G E
D I S C L O S U R E S
C L I E N T
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P R I C E S O B T A I N E D V I A T H E E X C H A N G E A R E C L O S E T O A C T U A L T R A N S A C T I O N P R I C E S
Initial pricing estimates can be produced by the Exchange, based on the actual scheme profile and informed by reinsurer quotes on other transactions. Thereafter, the Exchange sources pricing produced directly by reinsurers, not estimated by Mercer. This is real-life pricing, not indicative estimates. You receive a range of formal pricing quotes from reinsurers, periodically as required.
Reinsurer pricing and terms are based on transaction-quality detailed disclosures covering the scheme’s commercial situation, the scheme’s benefit structure and individual member data — the same disclosures Mercer uses when sourcing formal bids for transaction projects.
Mercer Pension Risk Exchange should be considered for any pension scheme looking at risk transfer options in the coming months or years.
The Exchange is a transparent online platform that facilitates the discovery of opportunities in a way never seen before.
• It allows reinsurers to see your scheme’s details directly and permits reinsurers to make exclusive proposals that you would not otherwise obtain.
• The Exchange assists in both decision-making and optimal timing selection for a longevity swap, improving outcomes.
• It is able to support pricing from all reinsurers currently active in the longevity market as well as other potential risk takers.
• Producing the scheme-specific disclosures upfront permits faster decision-making and transaction execution, allowing sponsoring employers and trustees to take advantage of often-fleeting windows of opportunity.
• The Exchange is the only solution that can provide a one-stop overview of scheme-specific bulk annuity and longevity swap pricing and analytics.
T H E E X C H A N G E S U P P O R T S A L L T Y P E S O F L O N G E V I T Y S W A P S
• Deals of all sizes and all complexities
• ”Streamlined” longevity hedging via SmartDB
• ”Pass-through” longevity swaps
• Use of captives
• Provides direct insight into member options exercises including pension increase exchange, enhanced transfer values and flexibility retirement options.
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H O W T H E E X C H A N G E W O R K S
Create scheme-specific disclosures containing
cashflows, individual member data and benefit details.
See the impact of a transaction on your scheme via a range of financial metrics and graphs.
Invite reinsurers to provide pricing proposals, uploaded
directly onto the Exchange and refreshed periodically.
Receive advice and guidance from Mercer on how to make your scheme more attractive,
with the goal of improving reinsurers’ pricing and terms.
Log in online to see pricing develop over time, seeing all
bidding reinsurers’ prices in one place, whenever necessary.
Pursue an actual transaction when it’s right for you.
If you are considering bulk annuity purchase options at the same time as a longevity swap, the Exchange facilitates comparison of both transaction types.
For more information on the bulk annuity capabilities within Mercer Pension Risk Exchange, please see our brochure here.
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Andrew Ward
+44 (0)207 178 3458
Simon Bramwell
+44 (0)207 178 5655
Alan Baker
+44 (0)207 178 5531
Suthan Rajagopalan
+44 (0)20 7178 3669
To learn more about how the Exchange can help you execute a successful longevity swap for your scheme please contact one of our experts.
C O N T A C T U S
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I M P O R T A N T N O T I C E S
References to Mercer shall be construed to include Mercer LLC and/or its associated companies.
This contains confidential and proprietary information of Mercer and is intended for the exclusive use of the parties to whom it was provided by Mercer. Its content may not be modified, sold, or otherwise provided, in whole or in part, to any other person or entity, without Mercer’s prior written permission.
The findings, ratings, and/or opinions expressed herein are the intellectual property of Mercer and are subject to change without notice.
This document does not contain advice relating to your particular circumstances. No investment decision should be made based on this information without first obtaining appropriate professional advice and considering your circumstances.
Mercer makes no representations or warranties as to the accuracy of the information presented and takes no responsibility or liability (including for indirect, consequential, or incidental damages) for any error, omission, or inaccuracy in the data supplied by any third party.
This does not constitute an offer or a solicitation of an offer to buy or sell insurance or constitute a solicitation on behalf of any insurance company, their affiliates, products, or strategies that Mercer may evaluate or recommend.
For Mercer’s conflict of interest disclosures, contact your Mercer representative or see www.mercer.com/conflictsofinterest.
Copyright 2017 Mercer LLC. All rights reserved.
For further information, please contact your local Mercer office or visit our website at:www.uk.mercer.com
Issued in the United Kingdom by Mercer Limited, which is authorised and regulated by the Financial Conduct Authority. Registered in England No. 984275. Registered office: 1 Tower Place West, Tower Place, London EC3R 5BU.
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