Seven Pensionskassen fail German regulator's stress test
German regulator BaFin has announced that the number of Pensionskassen – insurance-based occupational pension plans – failing a stress test has fallen from nine in 2015 to seven.
BaFin said the seven schemes were smaller Pensionskassen “not among the 40 largest pension plans” in this sector.
The regulator took pains to emphasise that the schemes that failed the stress test missed the required funding level by “a small margin” of between 0.4% and 4.23%.
However, BaFin president Felix Hufeld conceded that “individual Pensionskassen may be unable to finance their liabilities in full without external help”.
He also confirmed the regulator was in talks with those plans, and that most of them had already increased their buffers, although he said he doubted the extra funds would meet requirements.
Hufeld noted that “protection mechanisms” were in place, but he acknowledged these might soon be “put to the test”.
One of these mechanisms includes the Protektor insurance lifeboat scheme, into which many insurance-based financial service providers pay.
Hufeld said BaFin was “encouraging” companies – or shareholders where the Pensionskasse is organised as a listed company – to put more money into their funds before drawing on the protection scheme.
He did not specify how many Pensionskassen might be affected, but the statistics published in BaFin’s 2015 annual report show that the average funding level in the sector has dropped from 136% to 132% over the last year.
BaFin said the sector’s “short-term risk-bearing capacity” was “ensured”, but it admitted that, “should individual funds need to reinforce biometric standards or cut the discount rate, it will be increasingly difficult for them to find the necessary additional funding”.
Overall, there are 140 Pensionskassen in Germany, managing a combined €148bn in assets, a 6.5% increase compared with the year previous.