mast image

Special Report

ESG: The metrics jigsaw


Funding falls as German pension schemes struggle with low interest rates

Related images

  • landscape Berlin

Related Categories

Funding at some of Germany’s largest pension funds has fallen by as much as 4 percentage points over the first half of 2014, as schemes continue to struggle with the low interest rate environment.

Consultancy Towers Watson estimated that pension funds for companies within the DAX index saw coverage fall to 61.3% as of the end of June, down 4 percentage points compared with 2013.

The funds of the 50 companies within the MDAX saw a similar decline, down by more than 3 percentage points to just 48.1%.

Head of retirement solutions Thomas Jasper said the decline was due to the falling discount rate, now at an average of 3.07% compared with 3,65% at the end of 2014.

“Fluctuations in the funding ratio are normal and, in light of the long-term nature of occupational pension provision, should not be a reason for concern.”

According to the consultancy’s German Pension Finance Watch, the fall in the average discount rate also resulted in an 11.1% increase in liabilities to €336.8bn among the 30 DAX companies, compared with €206.6bn in assets – up by 4.3% over the first half of the year.

The growth in assets was largely due to an overall asset return of 5.5%, attributed to growth in European and global equity holdings.

Fixed income holdings returned 6%, with only real estate portfolios making a loss (-0.8%).

The trend was mirrored across MDAX firms, where liabilities rose by 11.2%, while assets under management increased by 4.1% to €27bn.

Have your say

You must sign in to make a comment


Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2575

    Asset class: Core Real Estate Muli-Manager Separate Managed Account.
    Asset region: Global.
    Size: CHF 150m.
    Closing date: 2019-12-20.

  • QN-2576

    Asset class: Small Caps Equity.
    Asset region: US.
    Size: $>100m.
    Closing date: 2019-12-09.

  • QN-2578

    Asset class: Sovereign Local Currency Emerging Market Debt.
    Asset region: Local emerging markets.
    Size: EUR 950m.
    Closing date: 2019-12-19.

Begin Your Search Here