Aba calls for greater German Pensionsfonds flexibility
GERMANY - Pensionfonds will not thrive in Germany unless they are subject to less bureacracy and more regulatory flexibility, members of the German pension fund association Aba have argued.
Approximately €17bn of pension assets are currently held in Pensionsfonds (€15bn of which are held in eight company Pensionsfonds with the remainder in those offered by insurers to clients), a vehicle created 10 years ago as an internationally recognised alternative to the insurance-based Pensionskasse.
Last year three companies created a Pensionsfonds (Deutsche Post, Nestle and the HBV banking group) - much less than was expected by some in light of the fact that these vehicles are granted reduced levies for the German pension lifeboat fund PSV. (see earlier IPE-story: Deutsche Post employs niche active managers for Pensionfonds)
Carsten Velten, head of pensions at Deutsche Telekom and board member of Aba, argued for raising the cap on the transfer of future accruals if Pensionsfonds are to take-off. "It is currently too low at €2,500 per year and this is deterring many from creating a Pensionsfonds," he said.
Robert Wiesner, senior vice president corporate pensions and related benefits at Bosch and Aba board member, also called for more flexibility and more lenient solvency rules. "Solvency reserves are ‘dead' capital for companies and it is unclear why vehicles, which are subject to strict risk management and asset management regulations, have to create complex custodial structures," he said.
Wiesner also wanted to see supervisors remove the general link between insurers and pension funds that was included in the initial Pensionsfonds legislation, and move more towards the prudent person principle, since company Pensionsfonds do not work for profit.
Furthermore, Wiesnern called for the allowance of capital payments from Pensionfonds in addition to lifelong benefits - as is the case with Pensionskassen - and less bureaucratic complications when it came to plan adjustments.
Wiesner said there was potential in large industry sector-wide Pensionsfonds, suggesting that voluntary transfers from Pensionskassen to Pensionsfonds should be made allowable. This could be set up in an insurance-based form, he added, which would streamline the occupational pension system and pool knowledge.
"If the Pensionsfonds regulations stay as rigid and restrictive as they currently are, we will run into a dead end," he argued.