Lloyds Banking Group pension schemes double down on longevity risk transfer amid record market activity

Lloyds Banking Group Pensions Trustees Limited has completed three longevity swap transactions with Rothesay Life Plc that together cover £4.8 billion of pensioner liabilities, the trustee said, as the UK market for longevity risk transfer continues to accelerate.

According to the original report, the three new longevity insurance and reinsurance arrangements cover £3.1 billion of liabilities in the Lloyds Bank Pension Scheme No.1, £700 million in the Lloyds Bank Pension Scheme No.2, and £1.0 billion in the HBOS Final Salary Pension Scheme. Rothesay acted as the insurer for each transaction; unnamed global reinsurers provided reinsurance for the Lloyds No.1 and No.2 arrangements, while an insurance subsidiary of US-based Prudential Financial, Inc. reinsured the HBOS arrangement. Two of the transactions closed in December 2025 and the HBOS deal was completed in September 2025.

The trustee said these transactions further reduce the schemes’ exposure to longevity risk and “make the Schemes more secure to the benefit of all members.” Vicky Paramour, Trustee Director and Chair of the Investment & Funding Committee, commented: “We are pleased to have successfully completed these transactions, which further reduce the Schemes’ exposure to longevity risk and make the Schemes more secure to the benefit of all members. The selection of Rothesay and the reinsurers followed a fair, robust and transparent review of the longevity insurance and reinsurance options available across the market.”

The deals come on the back of earlier activity this year. In March 2025 the trustee announced two longevity swap and reinsurance arrangements covering £5.1 billion of liabilities for two pension schemes, bringing the trustee’s total protected since 2020 to approximately £25 billion. A separate press release from Pacific Life Re indicated it provided reinsurance for transactions covering £2.1 billion in the Lloyds Bank Pension Scheme No.2 and £3.0 billion in the HBOS Final Salary Pension Scheme, reflecting the multiple-party reinsurance structures commonly used to underwrite large bulk longevity exposures.

Advisers and market participants underlined the commercial drivers. Matt Wiberg of WTW, lead adviser to the trustee, said: “WTW is proud to have advised the Trustee on their latest three longevity insurance and reinsurance arrangements, bringing the total to five in the last 12 months with three different reinsurers. I appreciate the collaborative efforts of all involved in achieving the successful completion of these transactions, enabling the Trustee to capitalise on currently attractive market pricing and providing further security for members benefits.” Legal adviser A&O Shearman added similar comment: “We are delighted to have advised the Trustee on these transactions, and to have been able to continue helping the Trustee reduce longevity risk across the Lloyds’ schemes. These are significant transactions in what continues to be an active market for longevity de-risking by pension schemes,” said Kate McInerney, A&O Shearman.

Rothesay and its reinsurance partners framed the deals as part of broader market demand for longevity protection. Ben Howe, Head of Reinsurance at Rothesay, said: “We are delighted to continue to partner with the Trustee and reinsurers to provide these de-risking solutions. Within a busy pension risk transfer market, the transactions demonstrate the continued high demand for longevity protection for UK pension schemes as part of their wider strategy to mitigate potential funding volatility. A collaborative and solutions-led approach across all parties, facilitated a timely and efficient process in the completion of both insurance and reinsurance arrangements.” Rohit Mathur, Head of International Reinsurance at PFI, also commented: “We are pleased to once again partner with the Lloyds Banking Group Pensions Trustees on a tailored longevity solution that supports their specific derisking needs. With our broad capabilities and expertise, PFI is exceptionally positioned to address the evolving needs of pension schemes around the globe and in expanding access to retirement security.”

Legal advisers for Rothesay were named in market filings: Debevoise & Plimpton LLP advised Rothesay on the three December transactions, the firm said, with a team led by counsel Rosamund Wood alongside partner Hugo Laing and associate Laura Jackson.

Industry data shows longevity swap activity accelerated towards the end of 2025. The sector recorded almost £26 billion of UK deals and a further EUR 6 billion of transactions in the Netherlands this year , a combined total that market observers calculate at somewhat north of £31 billion of longevity swap deals backed by reinsurance capital in 2025, a record for the sector. That surge has heightened demand for large pools of reinsurance capacity and demonstrated the appetite among defined-benefit schemes to lock in protection against the financial impact of pensioners living longer than expected.

Rothesay’s role in the market is part of a longer commercial relationship with Lloyds Banking Group. In March 2024 Rothesay agreed to acquire a c.£6 billion in-force bulk annuity portfolio from Scottish Widows, then a Lloyds subsidiary, a deal that transferred benefits for about 42,000 members and reflected wider consolidation in the bulk annuity and longevity hedging market.

The trustee’s most recent transactions underscore a continuing trend: large corporate pension schemes are increasingly blending insurer-led bulk annuity structures with multi-party reinsurance to manage longevity exposure while taking advantage of competitive market pricing and expanded reinsurance capacity. The trustee said the latest deals will add to the security of members’ benefits while allowing the schemes to manage funding volatility associated with future changes in life expectancy.