mast image

Special Report

Impact investing

Sections

German corporate pension plans return 4-5% – Towers Watson

Related images

  • German corporate pension plans return 4-5% – Towers Watson

GERMANY - German listed companies' pension plans returned 4-5% on average last year, depending on their equity ratio, while funding levels remained virtually unchanged year-on-year, according to Towers Watson.

For companies listed on the DAX index, pension plans returned 4% on average, while those listed on the mid-cap MDAX index returned 5%.

Thomas Jasper, pension expert at Towers Watson, said: "The equity quota in the MDAX is a little bit over that in the DAX."

On average, equity investments contributed to the full-year performance with a positive 9.5%, while bonds lost around 2.8%, which has had a larger impact on portfolios given German pension funds' overweight bond positions, the consultancy noted in its latest "German Capital Market Update".

<

Due to a number of interest rate changes, funding levels and liabilities have been very volatile over the last year.

In the fourth quarter alone, funding levels rose by 5.2% after an increase in the discount rate, or Rechnungszins, of 64 basis points.

This largely cancelled out a drop in funding levels over the first three quarters and brought the figure back to the year-end 2009 level of around 66%.

Liabilities in listed companies' pension schemes increased by 4.1% year-on-year despite falling by around 8.6% in the last quarter to around €231bn.

A drop in the discount rate by 74bps from 5.34% to 4.6% over the first three quarters had previously led to a considerable increase in liabilities.

Jaspers pointed out that most German companies did not cut pension spending during the crisis despite other cost-cutting measures.

"This shows how important occupational pensions are for entrepreneurs," he said.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

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

  • QN-2548

    Asset class: Fixed Income, Emerging Market Debt Hard Currency (Active).
    Asset region: Emerging Markets.
    Size: CHF 300-400m.
    Closing date: 2019-07-30.

  • QN-2549

    Asset class: Fixed Income, Emerging Market Debt Hard Currency (Passive or Passive Enhanced).
    Asset region: Emerging Markets.
    Size: CHF 300-700m.
    Closing date: 2019-07-30.

  • QN-2550

    Asset class: Fixed Income, Emerging Market Debt Local Currency (Active).
    Asset region: Emerging Markets.
    Size: CHF 250-350m.
    Closing date: 2019-07-31.

  • QN-2551

    Asset class: Fixed Income, Emerging Market Debt Local Currency (Passive or Passive Enhanced).
    Asset region: Emerging Markets.
    Size: CHF 250-350m.
    Closing date: 2019-07-31.

  • QN-2552

    Asset class: Fixed Income, High Yield (Active).
    Asset region: High Yield (US).
    Size: CHF 500-600m.
    Closing date: 2019-07-29.

  • QN-2553

    Asset class: Fixed Income, High Yield (Passive or Passive Enhanced).
    Asset region: High Yield (US).
    Size: CHF 500-1'100m.
    Closing date: 2019-07-29.

  • QN-2554

    Asset class: Global Real Estate (Equity, unlisted Funds).
    Asset region: World (ex-Switzerland).
    Size: CHF 200 mn (potential for further growth).
    Closing date: 2019-08-07.

  • QN-2555

    Asset class: Real Estate.
    Asset region: European.
    Size: EUR 50 - 100 million.
    Closing date: 2019-07-22.

  • QN-2556

    Asset class: FX Hedging.
    Asset region: Global.
    Size: Mandate size of CHF 1.5 bn.
    Closing date: 2019-08-09.

  • QN-2557

    Asset class: All/large Cap Equities.
    Asset region: China A-shares.
    Size: Unit linked platform (0m USD in initial investment).
    Closing date: 2019-08-01.

Begin Your Search Here
<