WTW’s German Pensionsfonds vehicle gets €2.6bn boost with Innogy

Germany’s Willis Towers Watson’s Pensionsfonds has gained €2.6bn in assets as a result of energy provider Innogy switching to the pension financing vehicle following the company’s takeover by E.On from RWE.

The European Commission gave the green light for the acquisition in September. The Willis Towers Watson Pensionsfonds now counts as one of the largest multi-employer Pensionsfonds in Germany, with €3.8bn in assets under management.

According to Willis Towers Watson, multiple steps were achieved in a tight timeframe in time for the closing of the RWE/E.On transaction: preparing contractual documentation, obtaining authorisation from all the subsidiaries involved and getting the approval of BaFin, the regulator.

The transaction involved the transfer of all Innogy pension assets from RWE Pensionsfonds and a corresponding change in the trust structure.

E.On does not have a Pensionsfonds, which is a vehicle allowing sponsor companies to move pension liabilities off the balance sheet, for one or more payments. There are both company-specific and multi-employer Pensionsfonds, like Willis Towers Watson’s.

The vehicle is particularly attractive for companies involved in mergers or spin-offs.

In a statement Willis Towers Watson said it was absolutely necessary for Innogy to switch from a company-specific solution to a third party provider solution in the context of the acquisition by E.On.

“In doing so, Innogy wanted to intervene as little as possible in the existing, proven workplace pension structures and to allow operating processes to continue largely unchanged,” it said. “The company also attaches great importance to the short-term and long-term cost-effectiveness and flexibility of the solution, which offers scope for joint solutions in the future.”

Heinke Conrads, head of retirement for Germany and Austria at Willis Towers Watson, said the deal with Innogy involved a complex M&A situation and that the consultancy was pleased to have been able to support the companies involved in dealing with the sensitive matter of occupational pensions.

Innogy finances pensions for around 10,000 pensioners via the Willis Towers Watson Pensionsfonds.