Germany’s pension insolvency fund has set the levy rate for 2019 at a higher level than that forecast in July, as it had subsequently warned members would likely be the case.
The final rate for 2019 will be 31 basis points, compared with 21 basis points in 2018.
In July the Pensionssicherungsverein (PSV) told members that the contribution rate could be less than 20 basis points, but in early October it announced the rate would likely be considerably higher – between 30 and 35 basis points – on account of “multiple insolvencies in the last few months”.
These would lead to a noticeably higher claims volume than what had been expected in the middle of the year, the Cologne-based institution said at the time.
The long-term average contribution rate to the insolvency fund is 0.27%.
Announcing the final rate this week, PSV said companies contributing to the fund would be paying around €1.1bn this year (2018: €725m), based on total balance sheet pension reserves of €348bn.
In the first half of 2019, recorded business insolvencies were down 3.7% on the first year of 2018, according to the German statistical office, but in October it announced that local courts had reported 0.2% more business insolvencies in July 2019 than in July the year before.
A relatively high profile insolvency in recent months has been that of UK travel group Thomas Cook, which filed for insolvency proceedings in late September. Its German subsidiary followed the parent company into insolvency. The pension plan sponsored by Thomas Cook in Germany had liabilities of around £365m (€417m) as of 30 September 2018.
PSV does not comment on individual companies, a spokesman told IPE.
The PSV is broadly comparable with the Pension Protection Fund (PPF) in the UK, although with some differences, for example with regard to the proportion of benefits they cover and caps on the compensation.