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
beneficiaries.
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.
The importance of ESG for companies is growing. This is because of the increasing regulatory pressure from the EU, and also the expectations and demands of the whole capital market. At the VEDRA Group, we are not afraid of the complexity of ESG criteria, but we are already moving in the right direction. For us, a complete ESG strategy is an essential part of a company's overall strategy.
Therefore, we understand that environmental, social and governance (ESG) issues can affect the society we operate in and the companies we invest in. We also know that future returns depend on how companies relate. That's why a responsible investment strategy is a core part of our overall way of managing risk and opportunity.
We have developed this policy with regard to the existing ESG policies and practices of our asset managers and their underlying portfolio companies. We recognize that there are many different ESG issues, such as anti-corruption, worker health and safety, environmental pollution, animal welfare, compensation and supply chain risks.
Therefore, we have decided to deal with each company we invest in or work with individually. Moreover, we plan to focus on the ESG issues that are relevant to an investment. We aim to invest in companies that adhere to applicable laws, regulations and industry guidelines, and to urge companies to handle ESG issues in a responsible way.
VEDRA Pensions is a proud signatory of
As part of our efforts to ensure a sustainable business and financial services industry, we aim to operate according to the following business principles
There are numerous international corporate governance guidelines and codes. Depending on the country, industry and size of the company, these guidelines and codes are either mandatory or voluntary. What these global codes and guidelines have in common is the underlying principles of independence, expertise and stakeholder engagement.
We are committed to corporate social responsibility (CSR) and ensure that all employees behave in a transparent and ethically correct manner. (Corporate Social Responsibility, CSR) haben, und sorgen intern dafür, dass alle Mitarbeiterinnen und Mitarbeiter sich transparent und ethisch richtig verhalten.
Our company is committed to the German Corporate Governance Code and adheres to its principles of good governance, transparency and accountability in the management and supervision of companies.
Moreover, we have hired one of Germany's top compliance lawyers to create our Compliance and Anti-Corruption Guidelines, which reflect all relevant legal standards and best practices for avoiding and identifying corruption and promoting ethical conduct.
Besides global initiatives and policies, we are also involved in our daily activities as a company and business partner. For instance, we compensate for our CO2 emissions and use of natural resources.
At VEDRA Pensions, we believe in the need for comprehensive, accurate and impartial information. As a company, we endeavour to provide and communicate the necessary expertise and are therefore committed to the industry in which we operate.
We are also a mandatory member of the PSVaG. This is the Cologne-based statutory insolvency insurance organisation for company pension schemes. The exact description of the tasks, the scope of the statutory insolvency insurance and the financing through compulsory contributions by the companies are regulated in the German Company Pensions Act (BetrAVG). VEDRA Pensions supports the PSVaG's aim of protecting confidence in the security of company pension schemes.
We are also a mandatory member of the PSVaG. This is the Cologne-based statutory insolvency insurance organisation for company pension schemes. The exact description of the tasks, the scope of the statutory insolvency insurance and the financing through compulsory contributions by the companies are regulated in the German Company Pensions Act (BetrAVG). VEDRA Pensions supports the PSVaG's aim of protecting confidence in the security of company pension schemes.
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!
Please send us an email or give us a call
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