The coverage ratio for solvency capital requirement of German Pensionskassen has increased by around three percentage points during 2022 compared with the previous year, according to the annual report published by the financial supervisory authority BaFin.
The coverage ratio according to the capital adequacy ordinance was 146% in 2022, up from 143% in 2021, according to BaFin’s figures.
Pensionskassen, therefore, fulfill rules on solvency according to IORP II Directive, with their short-term risk-bearing capacity guaranteed. Three Pensionskassen out of a total of 135 did not comply with the solvency regulations as of 31 December 2022.
Pensionskassen and life insurance companies were hit particularly hard by the low interest rate for years, but their situation improved as interest rates rose, the regulator said.
The high level of inflation does not have a direct impact on the benefits paid by Pensionskassen that are not linked to the price increase.
All Pensionsfonds had sufficient funds for 2022, and for the four following financial years, to cover the solvency capital requirement. For around two-thirds of Pensionsfonds, the regulatory capital requirements correspond to the minimum capital requirements of €3m for stock corporations and €2.25m for mutual pension fund associations.
BaFin also said that it was in talks with other potential providers of social partner pensions, expecting the number of social partner models to increase, after the two signed in the chemical sector, and by Uniper with union Ver.di.
Social partner models can be implemented through Pensionsfonds, Pensionskassen and life insurers.
Swiss pension market continues to consolidate
The number of pension schemes in Switzerland decreased again in 2022 to 1,370, from 1,425 in 2021, according to a report published by the Swiss occupational pension supervisory commission OAK BV.
The average funding ratio of Swiss pension schemes last year was 107.0%, OAK BV said, adding that currently 29% (previous year 2%) of the pension funds without a state guarantee and without a full insurance solution face high risk in terms of funding ratio.
At the end of 2022, 84% (previous year: more than 99%) of the pension funds without a state guarantee and without a full insurance solution recorded a funding ratio of at least 100%.
The share of pension funds with a state guarantee, many partially funded, was 6% at the end of last year, compared with 23% in 2021, the report added.
The average net performance of the pension funds without a state guarantee and without a full insurance solution was -9.2% in 2022, compared with 8% in 2121, and -8.2% for pension funds with a state guarantee, compared with 8.3% in 2021.
Schemes have cut future interest rate promises to 2.38% for the pension funds without a state guarantee and without a full insurance solution, and to 2.42% for the pension funds with a state guarantee, OAK BV said in the report.
AUM of Austrian provident funds increase
Assets under management (AUM) of Austrian provident funds (Vorsorgekassen) saw an uptick of 0.22% to €16.62bn year-on-year in 2022, according to the annual report published by the Financial Market Authority (FMA).
Vorsorgekassen invest 56.61% of assets in bonds, 17.40% is in held in maturity bonds, 11.18% in equities, 7.28% in real estate, 4.31% in loans, and 3.22% in other type of investments.
The amount of contributions paid to provident funds jumped by 13.06% year-on-year in 2022 to €2.10bn, including €1.95bn (13.39%) paid by employees, and €143 .63m (9.20%) by self-employed, the report added.
Pensionskassen saw the number of beneficiaries increase by 2.56% or 26,000 to 1.04 million year-on-year in 2022. This means that around one out of four employees in Austria is entitled to a supplementary pension. Around 13% of all beneficiaries is already receiving an additional company pension.
Austrian Pensionskassen managed assets totalling €24.35bn at the end of last year, down by approximately 9.7% compared with the previous year, with an average investment performance of -9.68%
On average, over the past three, five and 10 years, investment performance stood at -0.12%, +1.08% and +3.08%, respectively.
Equities accounted for the largest share of assets in Pensionskassen’s investmetn portfolios at 36.82%, followed by bonds at 31.71%, credit at 8.74%, real estate at 7.11%, and other assets at 13.12%.