GERMANY – BASF Pensionskasse, the 177-year-old €4bn pension scheme of the German chemicals giant, has imposed a tariff on new staff.
“In 2004, the company retirement program in Germany was adjusted to take account of changing conditions in the capital markets and rising life expectancy,” BASF said. “We are limiting financial risks through a new BASF Pensionskasse tariff for employees who join the company.”
The size of the tariff was not immediately clear. Corporate spokespeople and Pensionskasse managers did not respond to requests for information.
BASF, which started the Pensionskasse in 1888, said in its annual report that it was increasingly offering defined contribution schemes to help it avoid financial market risks.
“We partially finance company pension schemes through separate pension assets. Because a portion of these assets has been invested in shares and fixed interest securities, severe stock exchange and bond market losses could result in the accrued assets being insufficient to finance the pensions.”
Assets at the Pensionskasse rose to €4bn from €3.78bn at the end of 2003 – although its funded status fell to €162m from €211.0m.
The company said the fund plans to almost double its exposure to real estate in 2005 – to nine percent from five percent in 2004. Its average target allocation to equities would be stable at 45% while fixed income would fall to 44% from 48%.
The BASF Pensionskasse would be incorporated into the company’s financial statements with the conversion to new International Financial Reporting Standards as of January 2005.
Company-wide, BASF said that the liabilities at some of its pension plans exceeded assets for the first time – due to rising accumulated benefit obligations.
It said its payments for pension liabilities as of December 31 2004 totalled €4.2bn over the 2005-2014 period.
Yesterday IPE reported that utilities giant RWE has set up a deferred pay company pension scheme for its employees.