Olaf John, Senior Advisor – Vedra Pensions
1. In your opinion, why is it that occupational pension schemes are so closely linked to professional asset management?
At the end of the day, occupational pensions have to be financed. Early funding with an appropriate investment strategy helps mitigate risk and thus helps ensure secure pension payments. An isolated view of the liabilities, without external cover, without a funding or investment strategy, can have devastating consequences in the event of unfavorable company demographics, e.g. due to the increase in automation, AI and skills shortages.
2. Why is it so attractive to think about de-risking pension liabilities in the changed interest rate environment?
After years of low interest rates, the IFRS valuations of pension obligations have fallen sharply due to the rise in interest rates, which makes external funding more favorable than it has been for a long time. Anyone who puts off de-risking now could be in for a rude awakening in the future.
3. Pensioner company - what questions have you encountered so far?
- Why should you transfer the pension obligations to a company if you remain liable for the first 10 years?
- How do you get the key decision-makers on board for a pensioner company if the stakeholders and C-level decision-makers concerned have no direct incentives from the project?
- Isn't it safer to finance the retirees on the balance sheet than in a fully financed external vehicle?
- What are the balance sheet and cash flow benefits of outsourcing pension liabilities?
- How long does it take to implement a project for the outsourcing of pension obligations to a pensioner company?
4. What other trends do you see that you think we need to keep an eye on?
There are a number of de-risking options that are worthy of consideration. The pensioner company is the ultimate and most efficient way for a company to manage its portfolio of pensioners and vested pensioners. Individual investment strategies to fund and service pension liabilities are another trend.
5. What was it that attracted you to become a consultant with VEDRA Pensions?
To work with one of the pioneers in the field of pension companies and to support the topic of de-risking in its final phase. This is a topic that is playing an increasingly important role. What we can expect in the future is shown by looking at the UK, where DB plans were closed much earlier than here. Being part of the pension buy-out pioneer Vedra in a spirit of optimism is exciting for me.