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Chemie’s 16.5% return boosted by equities

GERMANY – Chemie Pensionsfonds, an equity-oriented pensions vehicle targeted to employees in the chemical sector, achieved a 16.5% return on assets in 2005 thanks to a strong performance of equity markets.

Chemie, one of the first German Pensionsfonds vehicles to be launched in 2002, invests its assets in two sub-funds, one of which invests up to 60% in European equities. Chemie’s other sub-fund, used to invest the assets of older chemical employees, is far more fixed-income oriented.

Chemie also said that despite more competition among other German Pensionsfonds, it maintained its leadership of the market with a 33% share. It said that as of December 31, it insured 18,000 chemical employees from 450 firms.

“2005 was in every respect a successful year for Chemie Pensionsfonds,” said Martin Großmann, chief executive of Chemie. “We achieved a markedly big increase in the return on our assets, we set up an online portal for our customers to manage their accounts and we adapted our fund to the new general contract for chemical employees.”

Chemie previously put its total assets at €40m, though this excludes the €18m taken in during 2005.

Chemie, along with HVB Pensionsfonds, a vehicle that is open to any industry, are both owned by German bank HVB. Munich-based HVB was acquired last year by UniCredit, the Italian banking giant.

By 2010, Großmann believes that both pension funds can take in €500m, especially now that the Pensionsfonds’ competitiveness was strengthened by the government last summer.

The government gave Pensionsfonds a boost by permitting companies to transfer pension assets held as book reserves to the funds at much lower cost. Those reserves currently account for 60% of the €367bn in total pension assets. Costs for insolvency protection for assets held by Pensionsfonds are also lower than for other vehicles.

As frequently reported by IPE, however, German companies, especially bigger ones, have largely preferred setting up their own external funds for pension liabilities. The funds are known as contractual trust arrangements (CTAs).

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