GERMANY - Mecklenburg-Vorpommern has signed a contract with the federal "Bundesbank" to take over the asset management of its newly-created Pensionsfonds.

The north-eastern German province last year announced it would set up a pension fund for its civil servants in order to ease the burden on the state budget. (See earlier IPE story: Mecklenburg joins civil servants fund trend)

Several other provinces have meanwhile taken a similar step and Bavaria announced in February of this year it chose the federal bank for asset management (See earlier IPE story: Bavaria chooses "Fed" for pension fund)

Mecklenburg-Vorpommern now made the same choice, the the finance ministry has announced.

"Although private banks have intensively sought to take on the asset management the province's finance ministry decided in favour of the rather cautious approach taken by the federal bank," it stated.

Details on the fund's asset allocation have not been revealed but in the earlier case of Bavaria the federal bank agreed not to invest no more than 20% in equities at any time.

The north-eastern province also said the fact that the federal bank is obliged by law to offer the asset management service to public Pensionsfonds for free was a deciding factor.

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