GERMANY - German financial group Allianz is relaunching its "Pensionsfonds Chance" offering to deliver various risk levels, on the back of demand from clients who want to pay lower additional contributions.
Until now, the "Pensionsfonds Chance" service has carried an target rate of return of 4.8% above the benchmark which meant at times when the fund did not reach this target companies who had outsourced their pension liabilities in the Pensionsfonds had to make additional payments.
Following "repeated client demand", Allianz is now offering three risk models with rates of return at 3.5%, 4% and 4.8%, depending on the underlying asset allocation.
"In the past, the asset allocation in the 'Pensionsfonds Chance' and the chances and risks attached to it did not always match our clients' demands," a spokesperson for Allianz confirmed to IPE.
"With the new offerings we can better serve our clients' risk appetite."
Of course, the lower the targeted rate of return the more a company has to pay up front in order to match pension liabilities.
Allianz has calculated by choosing the model with the highest rate of return, companies have to pay 35% less than clients in the Pensionsfonds with 3.5%, although the latter face a higher risk of making additional payments in times when capital markets do not offer enough return.
"Companies which want security should choose the model with the lower target return or - should they have enough liquidity - go for an insurance-based solution, said Josef Kuligovszky, chairman of the Allianz Pensionsfonds AG.
Under the insurance-based "Pensionsfonds Klassik" all risk is completely outsourced to the Pensionsfonds and is therefore more expensive upfront than any of the "Pensionfonds Chance" models.
Allianz noted the "Pensionsfons Chance" increased its assets under management by €250m in 2007 alone.
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