VEDRA Pensions is a specialist in the takeover and management of existing defined benefit pension obligations.
VEDRA Pensions’ origin dates back to its first acquisition of pension plans of the former AEG Telefunken Nachrichtentechnik, a former subsidiary of Bosch, in 2016. Since then, VEDRA Pensions has positioned itself as a first mover in the German market with innovative and pragmatic solutions, such as the first acquisition of pension liabilities by way of a carve-out of a listed company and the first acquisition of pension liabilities in a private equity M&A context. With this, VEDRA Pension has created the basis for pension risk transfers in Germany – a well-established instrument for business leaders in both the UK as well as the US. VEDRA Pensions works with carefully selected experts to achieve the best possible results for our clients and pension beneficiaries.
We serve almost
We have taken over responsibility for more than
million € in payment obligations to date.
We have paid out more than
million € in pensions since our foundation in 2016
Now more than ever, companies face many a number of problems and challenges related to pension liabilities:
Increasing life expectancy leads to longer pension payment streams
With changing demographics, the number of pensioners often already exceeds the current workforce, so that actual pensions payments outweigh the internal financing nature of pension accruals
Future pension payments increase due to inflation and salary trends
Balance sheet value as the present value of future pension payments fluctuates heavily with movements in interest rates
All these factors lead to an increased burden of pension provisions on corporate financial flexibility and balance sheets. Pension payments are more uncertain and thus subject to risk than bonds or loans. Balance sheet ratios such as equity ratios or cash flow figures fluctuate accordingly.
When is a pension buy-out appealing?
Companies can transfer the risks of existing pension obligations / liabilities to relieve the balance sheet from pension provisions and achieve a reduction in the risks inevitably associated with these pension provisions. Risks include both exposure to macroeconomic parameter like interest rates and inflation as well as shifts in life expectancy or changes of the regulatory environment.
Pension obligations can thus affect the current enterprise value, but also the future prospects of many companies.
Pension buy-outs can therefore create value in a number of situations:
As one possible solution to the described challenges, a buy-out means a legally and economically exempting transfer of the risks associated with the pension liability.
The VEDRA model offers you a solid and legally secure solution through an adequate initial funding of the pension liability. In addition, we and our experts ensure seamless support for you during implementation.
The transfer of pension obligations via a pensioner company to a pension specialist frees the company balance sheet from the risks mentioned above and hence increases its financial planning security.
But your stakeholders are not forgotten either. Our clients benefit from our profound understanding of the communication needs of all stakeholders, be they investors, pensioners, workers councils or employees. Over the last years, we have built up the expertise to present the pros and cons for the respective group of stakeholders, benchmarked versus the status quo and the stakeholder group’s objectives. Because as a pension liability underwriting specialist, we have a high level of experience and proven competence in pension-specific investment and risk management. VEDRA Pensions hereby coordinates all the specialists involved.
At VEDRA, we believe in innovation and recognise the importance of providing comprehensive, accurate and unbiased information.
As a company, we are committed to the industry in which we operate and to providing and communicating the necessary expertise.
If a company provides pension benefits, it is required to include them in the balance sheet and establish provisions accordingly. These provisions are determined based on actuarial calculations including factors such as discount rate, inflation, and longevity. These pension liabilities can either be assigned to dedicated assets or they are covered by the balance sheet in general.
In a pension buy-out, the objective is to separate these pension liabilities along with the corresponding financial resources and move those from the balance sheet of the company.
Do you would like to know more about the possibilities for risk transfer of pension liabilities and pension buy-outs? Feel free to write to us or give us a call.
If you have any questions about your pension scheme, we will be happy to help!
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