BASF Pensionskasse, the pension fund for the German chemical company, tweaked its asset allocation last year by increasing investments in bonds and private equity, while reducing loans and equity investments, according to the scheme’s financial report for 2022.
Its bond allocation increased slightly to €5.48bn last year, from €5.15bn in 2021; it made new investments in its three bond funds totalling €438m, deploying €0.2m to set up a new fund of funds.
Within the asset class, BASF Pensionskasse allocates to corporate bonds, government bonds, emerging market debt, convertible bonds, US municipal bonds, commercial real estate debt, in addition to infrastructure equity and credit opportunity funds, it said.
The scheme increased investments in European bonds to 52% of its total assets allocated to the asset class, from 47.9% in 2021, while investing 33.8% in global bond funds and 14.2% in emerging market funds, according to the report.
BASF Pensionskasse holds 99.93% of a fund of funds structure (SICAV) investing in 33 private equity funds. Net assets in the SICAV investment company increased in the financial year 1 October 2021 to 30 September 2022 to €1.47bn, from €1.31bn in 2021.
The report also showed that equity investments through funds fell from €2.01bn in 2021 to €1.81bn last year.
Within the asset class the scheme increased its allocation to global equity funds by 6.1% to 40.9%, reducing its exposure to European bond funds by 3.8% to 39.1%, and to emerging markets funds by 2.3% to 20%.
It continued to expand its real estate investments – to €605m last year, from €546m in 2021, the report showed.
The pension fund recorded returns of investments of €365.76m in the 2022 fiscal year, up from €359.12m in 2021 and €349.16m in 2020, thanks to “a forward-looking dividend policy”, and despite a challenging year due to the war in Ukraine, high inflation and interest rates, it said.
Returns on loans in particular decreased by €14.5m to €8.4m year-on-year in 2022 mainly due to lower variable interest payments from an infrastructure bond.
This year, the scheme expects returns on investments at previous year’s level, with the decisive factors determining the volume being dividends from Spezialfonds, it said.
Assets under management increased at book value by €260.6m, or 2.8%, year-on-year in 2022 to €9.57bn.
The pension fund allocates 82.5% of its total assets to investment funds, 9.1% to private equity, 2.7% to real estate, 0.3% to mortgages, and 5.3% to other loans, according to the report.
Contributions likely to fall
BASF expects a slight decrease in the income from contributions due to further shifts within its membership base, and a further increase in benefits payout, it said.
The amount of contributions continued to fall last year to €216.37m, from 217.67m in 2021 and 224.17m in 2020, due to a decline in the number of members that signed up for a Tariff 1 occupational pension agreement.
The company paid the largest share of contributions last year amounting to €147.59m; members paid €65.96m, and the remainder was made up of allowances and transfers/supplementary contributions.
The number of members that signed one of three occupational pension agreements (Tarif 1, Tarif 2 and Tarif 2021) declined to 94,146 in 2022 from 93,337 in 2021.
The Pensionskasse paid old-age, surviving and disability pensions to 59,889 members last year.