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Bosch looking at transferring book reserves

GERMANY - German multinational Bosch says it is actively exploring ways to transfer its German book reserve commitments into a funded pension arrangement.

The move would be via the German pensionsfond vehicle, although Bosch says it has yet to see enough efficiencies under German law to actually do so currently.

Speaking at the European Federation for Retirement Provision/National Association of Pension Funds International conference in Barcelona today, Bernhard Wiesner, head of corporate pensions at Bosch, told delegates that he was currently charged with producing a centralised “pension guideline” for the company’s global pension commitments.

This, he said, included the possibility of Bosch adapting its pensionsfond created for employees under the German Riester legislation to act as a funding vehicle for the group’s balance sheet pension provision in Germany – a potentially significant shift for any German corporation.

Talking to IPE, Wiesner noted that Bosch was only one of two German industrials, Deutsche Telekom being the other, to have set up a pensionsfond for employees under Riester.

He added that the company was looking at ways to adapt its pensionsfond to replace the book reserve arrangement, but had yet to see sufficient clarity and feasibility under the Riester legislation to do so.

“We would like to use our pensionsfond for this purpose but the problem at the moment is that the vehicle is insufficient to do this. We need the pensionsfond vehicle to be more efficient.”

One difficult issue with Riester, says Wiesner, is the question of guarantee of capital inherent in the Riester law. The other, he says, is that there is as yet no possibility for employers to contribute above the Riester four percent contribution ceiling for individual employees.

Wiesner points out that the company is under no current pressure to fund its book reserve commitment, but says this is part of a longer-term pensions view of the company.

“The magnitude of the pensions liability is growing in all German companies like ourselves and we have to think about the long-term view. We are discussing this continually at the moment and we believe there is an absolute need for an efficient vehicle for pension funding.”

However, he says he is seeing a number of steps in the right direction in Germany. One, he says, was the reduction earlier this year of contributions needed by pensionsfonds to the PSV (Pension Sicherungs Verein), the German net that covers company/pension plan insolvency, from 100% to 20%.

The other was the Ruerup Commission’s work looking at areas such as the tax efficiencies of German pension funding vehicles.

“These are positive signs of movement in the right direction at the moment, but the legislation still has to be changed. We hope that in the next few months and years this issue will be solved.”

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