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German financial services scheme BVV ups return

GERMANY - BVV, Germany’s largest traditional pension fund serving the financial services industry, has disclosed a small increase in its guaranteed return for 2004.

BVV, which has €16.5bn in assets, said its return on employee contributions improved slightly to 4.5% in 2004 from 4.46% in 2003. The level is above the 2.5% standard for other traditional Pensionskassen.

The not-for-profit organisation also said its surplus cash rose to €257.4m in 2004 from €175.8m.

Speaking at BVV’s annual meeting, Rainer Jakubowski, board member responsible for asset management, attributed the increases to lower investment costs for the fund as well as better returns investments.

BVV currently invests 80% of its assets in mostly German and European government bonds. Of the other 20%, 10% is invested in equities, 5% in real estate funds, 4% in corporate bonds and the remaining 1% in hedge funds.

Jakubowski has told IPE previously that BVV may raise both the equity portion of its portfolio and invest as much as 4% in hedge funds.

Jakubowski also said that in view of the stricter capital adequacy requirements for Pensionskassen from 2007, BVV had raised its capital ratio to 4.5% of total assets. “As a result, we are well ahead of our target for the end of 2007,” Jakubowski told scheme members.

BVV currently has 603 members, almost all of whom are foreign and domestic private banks active in Germany. It also has 123 “non-traditional” members from the German financial services industry, including accountants, finance lawyers, tax advisers and private equity companies. “This is the area where we are growing,” commented Jakubowski.

BVV also said it paid out €501.6m in pensions to 81,003 beneficiaries in 2004. This compares with the €468.4m paid out to 77,661 beneficiaries in 2003.

Separately, BVV said board member Christoph von Langsdorff was retiring at the end of 2005. It did not name a replacement.

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