Only one-third of German companies are confident their pension funds are “fit for 2020”, according to a survey by Towers Watson.

Another third is sure their plans will have to be adjusted, while the remaining third did not comment or was unsure.

Alfred Gohdes, chief actuary for occupational pensions at Towers Watson Germany, told IPE: “The low interest rate environment has increased the costs for traditional pension promises considerably.”

He added that companies had “already done a lot to ‘immunise’ themselves against interest rate volatility” – shifting to funded pension plans, for example.

According to the survey, 55% of companies in Germany are planning to revamp their pension plans to better suit changing demographics in the workforce, as well as to increase flexibility, transparency and predictability.

Towers Watson calculations for DAX companies’ pension plans confirmed earlier preliminary calculations by Mercer.

The average return on the pension plans was 5.1%, and plan assets increased from €192bn to €198bn year on year.

Liabilities came down from €314bn to €303bn as discounts rates were on the rise again.

This means the average funding ratio increased from 61% to 65%.

But Towers Watson also noted widely varying funding levels among the companies within the DAX, ranging from 22% for Deutsche Telekom to 99% at Deutsche Bank.

Like Mercer, Towers Watson also concluded that companies in the DAX were aiming to increase funding levels in their pension plans.

The consultancy also pointed out that diversification within each asset class in pension funds’ portfolios was increasing.

At year-end 2013, the average asset allocation was 24% in equities, 55% in bonds, 5% in real estate and 16% in “other” investments.

Thomas Jasper, head of retirement solutions at Towers Watson Germany, pointed to a shift towards alternatives, infrastructure, insurance contracts and private equity.

“We assume that the equity allocation will remain relatively stable at 25%, as the last few years have shown that this more or less corresponds to the strategic asset allocation in the DAX companies,” he said.

In 2007, DAX schemes’ average exposure to equities was 30%, dropping to 23% in 2008.