Pension risk transfer specialist Funding Solutions Deutschland has completed a pension buyout deal for automotive supplier Sinterwerke Herne, lifting the firm’s total entrusted assets to over €500m, according to managing director Magnus Schmagold.
The transaction marks the firm’s ninth pension buyout and involved the takeover of Sinterwerke Herne’s pension liabilities from parent company Sumitomo Electric Industries, a Japanese conglomerate listed on the Prime Market of the Tokyo Stock Exchange.
As part of the deal, Funding Solutions established a dedicated pension corporation – Funding Solutions Sinterwerke Herne Pensions – to manage the obligations.
The buyout encompasses a complex mix of pension commitments, including direct commitments and Pensionsfonds entitlements.
“Sinterwerke is a traditional firm with a long legacy and a rather complicated pension architecture, which affects different Pensionfonds, WTW and Bosch Pensionsfonds, Pensionskasse and direct insurance,” Schmagold told IPE.
Founded originally as a division of Bosch, Sinterwerke later operated as BT Magnete Technologie, a joint venture between Bosch and Japan’s TDK.
The governance structure of the new pension corporation includes capped management fees, oversight by external trustee firm Helaba Trust e.V. through a contractual trust arrangement (CTA), and asset management led by BlackRock’s outsourced chief investment officer (OCIO) team.
“There are checks and balances in place,” Schmagold said, adding that Helaba monitors Funding Solutions’ performance, and fees are only paid if pension indexation targets are met and the funding ratio remains above a specified threshold.
The Sinterwerke transaction follows two other deals completed by Funding Solutions in Q1 2025. One involved the pension liabilities of Sofotec, the German subsidiary of pharmaceutical group AstraZeneca, while the other – not yet publicly disclosed – relates to the German arm of a US-based pharmaceutical company.
In the latter case, the client transferred pensions directly into a newly set-up Funding Solutions entity via a direct pension transfer, Schmagold explained.
Market momentum
Germany’s pension buyout market – long considered dormant compared to the UK or the Netherlands – is beginning to show signs of acceleration. Corporates are increasingly exploring options to transfer some of the estimated €700bn in pension liabilities still held on balance sheets.
“It is very clear that there is much more [activity] now compared to last year or the year before,” said Schmagold. “The market has picked up, and pension buyouts are here to stay.”
Market participants expect German buyout volumes to grow significantly in the coming years, potentially reaching €60bn – equivalent to the current size of assets held in Pensionsfonds – over the next five to 10 years.
In a separate development, specialist provider VEDRA Pensions recently took over the pension obligations of Hauck Aufhäuser Lampe Privatbank – marking the first buyout transaction involving a German bank.
To support the market’s evolution, Germany’s occupational pensions association aba has launched a working group to address governance and capital adequacy requirements for pension corporations, responding to increasing corporate demand for legal clarity before engaging in such transactions.
Despite the recent momentum, Schmagold and other market players caution that legal and accounting uncertainties, along with regulatory complexity, remain key barriers to more widespread adoption.
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