AUSTRIA – The Valida Industrie Pensionskasse, formerly the pension fund for Siemens, has confirmed plans to restructure its liabilities.
Austrian pension funds have been allowed to restructure their sub-portfolios to offer members more choice since the beginning of this year, when the new PKG-Novelle reform went into effect.
The €800m Valida Industrie Pensionskasse was created earlier this year after the Valida group acquired the Siemens Pensionskasse last summer.
From January 2014, the pension fund will introduce sub-portfolios managed “closer to the benchmark” but with some additional risk, according to Stefan Eberhartinger, a board member at Valida.
“In addition to our conservatively managed portfolios, for which we are using benchmarks with a wide tracking error, the new portfolios will have a slightly higher exposure to risky assets, and there will be fewer tactical measures,” Eberhartinger told IPE.
The idea is to shift members under the age of 55 into those portfolios and keep the others in the more conservatively managed strategies if they do not object.
“Our main aim in the conservatively managed portfolios is to minimise pension cuts,” Eberhartinger said.
In Austria’s defined contribution system, the discount rate is used to determine the level of the pension payout.
If this rate, the Rechnungszins, is not achieved during the pension phase, the pension is cut.
During the active phase, however, the rate is irrelevant, and more risk can be taken.
People with newer contracts tend to have a lower discount rate than older members.
But Eberhartinger took the unique step of changing the contracts of many of active members, when they transferred to Valida, to a lower discount rate, from 5% to 3%.
“About two-thirds of those active members agreed to the transfer, while one-third kept the higher discount rate,” he said.
In terms of asset allocation, Valida divested from gold in the first quarter and reduced its exposure to emerging markets “significantly”, a move Eberhartinger said had “paid off”.
He said a hedge fund strategy administered by Macquarie, comprising 5% of the scheme’s overall portfolio, had been one of its better performers.
The fund of funds, managed by Feri, invests in 18-20 funds categorised in four different hedge fund strategies to ensure low correlation with the rest of the portfolio – “particularly equities”, Eberhartinger added.
He added: “We have slightly upped our investments in distressed strategies, and this is going well.”
Valida’s real estate holdings, which make up 10% of its portfolio, fared less well.
The pension fund is invested in open-ended real estate funds managed by SEB and Catella that “will both probably be closed shortly”.
“Both are now thinking about transforming their respective funds into a Spezialfonds – and we would probably stay on board,” Eberhartinger said.
But he added that the Pensionskassen’s largest real estate investment in a residential fund had reported “very good performance”.
He said that while he still “believed” in real estate as an asset class, he had had to adjust his return expectations.