Pension Liability Transfer / Buyout
Transfer, onboarding and professional
management of pension obligations.
Pension Liability Transfer (PLT)
Background
Most MNCs closed their DB-Schemes in favour of DC-schemes (in Germany usually hybrid-DC or German-style DC). The accrued pension obligations covering pensioners or vested leavers may be transferred (spin-off or hive-down) to a SPV (Rentnergesellschaft) assuming the obligation. This transaction is called pension buyout or Pension Liability Transfer. The SPV is then transferred to Funding Solutions as the consolidation and run-off platform.
Advantages of a Pension Liability Transfer (PLT)
Tried-and-tested transaction
1
Release from legal liability
Pension liabilities are transferred to a pensioner firm which assumes the obligations in full. Provided proper handling, only a contingent liability remains for the obligations due and payable in the first 10 years (§ 133 UmwG). This risk can be mitigated, for example, by CDI-Investing or a bank guarantee.
2
Transfer of
economic risks
All risks, such as investment risk, inflation and longevity are addressed as part of the transfer. No further obligations / no additional payments
3
Balance sheet relief
A (partial) settlement and immunization of the balance sheet according to German-GAAP, IFRS or US-GAAP can be reached. All P&L and balance sheet effects can be neutralized / immunized.
4
Administrative simplification
Full outsourcing of administrative work, while existing partners or mandate specific in-house solutions may be included.
5
Securing scheme members
Funded protection of the company´s pension obligations and additional protection by an external CTA-Trust. Priority coverage of obligations not uncovered by PSVaG.
Pension Liabilities
The pension commitments to pensioners and vested leavers are transferred to the pensioner companies ( § 123 para. 2, or para. 3 UmwG).
Pension run-off SPV / Pensioner firm
The pensioner company will be acquired by Funding Solutions as part of a share deal. The assets will be transferred to the external CTA-Trust.

Wolfgang Degel appointed as Senior Advisor for Funding Solutions
Wolfgang Degel, who has been responsible for the company pension schemes (bAV) of the BMW Group for many years, joins our Pensions & Investment Office.
Pension Buyout and pensioner companies in portfolio institutionell
Portfolio institutionell uses gategroup and FSD as a case study for pension buyout in Germany via the use of a Rentnergesellschaft / pensioner company