Rolls-Royce uses swap to reduce liabilities

Rolls Royce factoryRolls-Royce and its pension fund have agreed a longevity swap to give additional security to members of the company’s final salary pension scheme.

The contract with Deutsche Bank reduces the risk on approximately £3 billion of the fund’s liabilities.

The trustee was advised by Aon Hewitt (as lead adviser), Linklaters (as legal adviser) and Mercer (as investment adviser). State Street will act as credit support services manager and custodian.

The cost of this transaction will be borne by the pension fund and will have no material effect on the funding arrangements. Around 37,000 pensioners are covered by this agreement.

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