GERMANY - Engineering giant MAN Group has hired Rauser AG, a German actuarial and pensions consultancy, to help it set up an external fund to finance €1.7bn in pension liabilities and advise on strategic asset allocation.
Last month, MAN confirmed that it would remove the €1.7bn in liabilities from its balance sheet and finance them via an external fund, in this case a contractural trust arrangement (CTA). The firm has another €350m in pension assets not on its balance sheet.
MAN’s decision follows its switch to international accounting standards. Under IAS, a CTA is regarded as an ideal way of funding pension liabilities.
A MAN spokesman told IPE from Munich that beyond helping it to construct the CTA, Rauser would make “first suggestions regarding the asset allocation”. This entails drawing up a new asset-liability study.
The spokesman also said that MAN itself would handle the actuarial tasks and pensions administration related to the construction of the CTA.
Founded in 1979, Rauser is known as a specialist in actuarial services and pension administration. It began offering investment consulting a few years ago and currently has 1,000 corporate clients, including those listed on Germany’s DAX equity index and small- to midsize enterprises.
In terms of asset management, the MAN spokesman said the company would, during the selection of managers (beauty contest) “favour banking partners with whom we have a long relationship with”.
MAN has emerged as the latest German multi-national to create a CTA to fund its pension liabilities. Others are Deutsche Bank, technology group Siemens, airline Deutsche Lufthansa and, most recently, media giant Bertelsmann.
MAN, which employs around 60,000 people, had operating profit of €573m on sales of just under €15bn last year.
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