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Mercer to take on Babcock-Borsig pensionskasse

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  • Mercer to take on Babcock-Borsig pensionskasse

GERMANY - The pensionskasse of insolvent energy industry service provider Babcock-Borsig will in future be administered by Mercer instead of Swiss Life.

The planned takeover of Babcock-Borsig's 19,000 members and €500m in assets by Swiss Life had failed earlier this year because of regulatory requirements. (See earlier IPE story: Pension transfer more than triples Swiss Life assets)

"Mercer will take on the administration of the Babcock pensionskasse, the contract is already signed," a spokesperson for Mercer Germany confirmed to IPE, though further details will ony be released over the coming days.

The regulations issued by Bafin demand the immediate creation of a buffer for additional guarantees granted by the new pensionskasse after the switch from a company-based scheme, in Germany known as "regulierte pensionskasse", to an open provider like Swiss Life or Mercer, also known as "deregulierte pensionskasse".

Swiss Life wanted to fully guarantee the benefits last negotiated and wanted to build the buffers gradually.

"If such an extension of guarantees is of their own volition, the necessary buffers cannot be built over a longer period of time," the Bafin explained in a statement sent to IPE, adding that this regulation was derived from the principles of commercial law.

German regulator Bafin stressed that "it has as yet not prohibited" any transfer from a company pension fund to an open provider.

Apart from the buffers for additional guarantees the new managing company also has to ensure that members are compensated for the loss of their status as members of a mutual benefit society - a form which some company pension schemes take in Germany.

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