BaFin unconcerned by stress test failure of nearly dozen Pensionskassen
Nearly a dozen German Pensionskassen have failed the stress set by local supervisor BaFin, the body has announced
However, the supervisor added that it was not concerned about the short-term risk-bearing capacity of Pensionskassen.
Of the 146 Pensionskassen supervised by the German supervisor BaFin, 131 filed the results for the issued stress test.
Some 11 Pensionskassen failed the test in 2013, compared to seven in the previous year.
Only three of those Pensionskassen failed all scenarios and the supervisor added none of the eleven institutions were among the 20 largest in the sector in Germany.
Additionally, five of those that failed the test are already closed for new entries.
The BaFin added the underfunding level was “generally low” and the Pensionskassen concerned had already put in place measures to improve risk tolerance and achieve the necessary solvency levels – or will do so soon.
As part of its internal prognosis on the impact of a continued low interest rate scenario, the German supervisor calculated the average net interest rate granted by Pensionskassen for 2013 at 4.3%, slightly below the 4.4% granted the year before.
The supervisor said in its annual report: “With some Pensionskassen, BaFin had to raise awareness last year that in times in which capital gains will most likely continue to decline it is more important to strengthen buffers than to increase member payouts.”
Overall, German Pensionskassen reported a solvency level of 134%, which was similar to that of the previous year and “generally speaking” fulfilled the solvency requirements, BaFin pointed out.
“This obviously continues to ensure the short-term risk-bearing capacity in the sector,” the supervisor added.
Based on projections, BaFin calculated an increase in contributions to Pensionskassen by €6.4bn in 2013, bringing the total number of assets managed in the sector to €131bn – although the increase was also aided by capital gains.
However, the increase in contributions at 2.6% last year was less pronounced than in 2012 when it amounted to 5.9%.
Regarding the 31 Pensionsfonds, the other major vehicle in the German occupational retirement landscape which is less strictly regulated in its investment and liability management, BaFin also noted a decrease in contributions from €831m in 2012 to €742m last year.
“The fluctuations in contributions are mostly down to the fact that with a Pensionsfonds, depending on the contract, contributions are often made as one-off lump sum payments,” the supervisor explained.
It added all Pensionsfonds passed the BaFin’s internal stress test and fully covered their liabilities.
Assets managed by Pensionsfonds increased from €1.4bn to €1.6bn year-on-year.