Scottish Power has entered into a longevity swap for its defined benefit pension scheme.
It transfers the risk of almost 9,000 scheme members living longer than expected to three reinsurers.
The deal was transacted by Abbey Life. Mercer and Hymans Robertson acted as advisers on the deal.
Sheila Duncan, human resources director at Scottish Power, said: “We are extremely satisfied with the completion of this hedge at an attractive price.
”This transaction demonstrates Iberdrola’s commitment to the security of the benefits of our pension scheme members and reduces risks at group level as part of our ongoing strategy of pension risk management.
”We are particularly pleased that the transaction was concluded within the provisions of the scheme’s existing funding reserves, thus not requiring additional cash contributions.”
Peter Thompson, chair of Scottish Power Pension Scheme Trustee, added: “The trustee is pleased to have taken another important step in our ongoing process to improve further the level of security of all our members’ benefits.
“This deal reduces risk to the scheme, providing increased certainty to our sponsoring company, and most importantly, increased security to our scheme members.”