Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Longevity definition

What does Longevity mean? Longevity, in legal and pensions practice, describes members’ life expectancy and anticipated mortality improvements, which determine how long pensions and annuities are payable. It is not defined in legislation or case law; it is an actuarial and descriptive term used across pensions, insurance and corporate transactions in the UK and Ireland. Increased longevity raises the present value of defined benefit pension liabilities because benefits (including spouses’ pensions) are payable for life. The possibility of further improvements in life expectancy creates longevity risk: a material, hard‑to‑predict factor for scheme funding, employer covenant assessments and transaction pricing. Lawyers encounter longevity in actuarial...

Hedging longevity risk in UK DB pension schemes: legal and practical guide to swap structure, pricing, collateral, credit risk, termination and governance

Published by a LexisNexis Pensions expert

Practice notes

Pension schemes and their sponsoring employers confront a range of risks linked to their defined benefit pension schemes, a notable one being the cost of improving life expectancy. Alongside traditional ways of hedging scheme risk—such as buy-outs or buy-ins—de-risking options based on a ‘swap’ contract have been used for some time. A ‘swap’ is a broad term for an agreement under which the parties exchange a sequence of cashflows tied to an underlying asset or other variable. For more on buy-outs and buy-ins, see Practice Note: De-risking—pension buy-outs and buy-ins.

What is a longevity swap?

A longevity swap is a means for a pension scheme to hedge the risk that members live longer than anticipated. This is now most commonly arranged via an insurance policy (although the earliest transactions were implemented using a derivative). Under a longevity swap, the scheme trustees make pre-determined regular payments—typically monthly or quarterly—to the swap provider over a fixed period, modelled on the then life expectancy for specified members...

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Madhu Jain

Gowling WLG

Madhu is a partner in the corporate team. She advises on the full range of corporate transactions in the insurance sector (life and non-life) (M&A transactions, court sanctioned transfers, insurance and reinsurance) in the UK and on a cross-border basis. Madhu is also a key member of our pension risk transfer advising on bulk annuity deals, longevity only or whole annuity insurance and reinsurance transactions. She is part of the team that won the Financial Times most innovative law firm award in the year after she had lead roles on the ITV and Uniq annuity derisking transactions. Madhu is praised for her 'incredible work ethic and drive and her ability to draw parties together to find a solution'....

Christopher Stiles

Gowling WLG

Christopher Stiles is a partner based primarily in Birmingham who helps clients to deal with any contentious or non-contentious legal issues that may arise in relation to their pension plans with the greatest possible ease and efficiency.Pensions can be a challenging area for employers, with pension plans that ranging from legacy arrangements that are now closed to accrual, but are still a major liability on the balance sheet, to ongoing plans that are used to reward current employees.Christopher takes a particular interest in innovative and complex projects including asset-backed funding arrangements, liability management exercises and buy-outs.On the trustee side, Christopher has close ongoing relationships with his trustee clients and helps them through the legal issues they face in running their pension schemes, both the day-to-day problems and larger projects including scheme mergers and wind-ups...

Web page updated on 21/05/2026

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