German energy company E.ON is setting up its own Pensionsfonds with a view to further consolidate occupational pensions within the group, said Stefan Brenk, head of pension finance and asset strategy at E.ON and chief executive officer of the new Pensionsfonds.
“The same [consolidation and centralisation] applies to the governance of investments and the investment management behind the financing vehicle. This is what makes the E.ON Pensionsfonds so important to us,” Brenk added.
The E.ON Pensionsfonds will replace other financing vehicles in the context of designing modern pension plans, it said. It is still waiting for approval from the supervisory authority BaFin.
The fund will initially take over the pension assets of approximately 10,000 pensioners of Innogy, an E.ON subsidiary, and around €2.5bn in security assets from Willis Towers Watson (WTW).
The assets were transferred from the RWE Pensionsfonds to the WTW Pensionsfonds in 2019 following the takeover of Innogy – a RWE subsidiary at the time – by E.ON.
Provisions for pensions at E.ON declined in the first quarter of this year to €6.40bn from €8.08bn last December, due to higher actuarial discount rates, according to the company’s latest financial statement.
The actuarial discount rate rose in Germany to 1.2% in March of this year, from 0.8% in December last year.
In the UK, where E.ON also has a subsidiary business, the discount rate grew from 1.4% in December to 2% in March, according to the statement.
E.ON has started preparations for the new Pensionfonds in parallel with the closing transaction to take over Innogy “in order to finally be able to take [over] Innogy’s pensioners portfolio,” Brenk explained.
WTW is advising E.ON on the implementation and operation of the Pensionsfonds.
Johannes Heiniz, head of general consulting retirement Germany at WTW, will take over the post of external board member and Tim Voetmann, actuary at WTW, will hold the position of responsible actuary at the new E.ON scheme.
Heiniz told IPE that further set-ups of Pensionsfonds vehicles in large corporation in Germany are “certainly not ruled out in the next few years”.
He added: “There has been a clear trend towards Pensionsfonds providers in Germany in recent years not least against the background of increasing regulations.”
The adoption of the first social partner model in Germany, which also relies on Pensionsfonds, gives a further push to the importance of the vehicle, he said.