Premier Foods linked to £2bn longevity swap deal

According to reports, trustees at the company - responsible for brands such as Branston Pickle and Mr Kipling - are close to signing a contract with an unnamed reinsurer.

Premier Food's defined benefit scheme deficit has ballooned in the past year, with the gross deficit increasing from £11.5m in 2008 to £300.6m in June, last year.

Some £189.5m of the 2009 deficit relates to Premier schemes, with the remaining £111.1m shortfall in the RHM schemes.

A company spokesman refused to confirm details of the contract, although he was keen to stress that such a deal wouldn't affect pensioners.

However, he admitted the scheme's trustees "can't ignore" the developing market for longevity transactions.

"I can't confirm the details as to where Premier is, but I can confirm that they are looking at this as part of good governance," he added.

The market for longevity swaps could reach £20bn this year as schemes search for ways to remove risk from the company balance sheet. (Global Pensions; January 28, 2010)

Babcock International Group, RSA Insurance Group and the Royal County of Berkshire Pension Fund have all completed similar deals in the last year.