GERMANY - Herbert Walter, the top executive at Dresdner Bank, says he expects the German pension system to become 50% fully-funded, from the current 20%.
“In Germany today, 80% of old-age provision comes from the pay-as-you-go state pension system and only 20% is fully-funded,” said Walter, chairman of the bank’s board of managing directors.
“But we expect this to change to a ratio of 50:50. The demographic development in Germany, with more and more ‘oldies’ and fewer and fewer ‘youngsters’ will force a reform of the social welfare system, particularly of old-age provision.”
Speaking in an interview on parent Allianz’s web site, he added: “In the future, no-one will be able to enjoy a financially secure old age without having made their own financial provisions.”
The comments gave no timeframe for the shift away from PAYG. They came as Allianz reported its first-half earnings, which revealed a seven percent rise in assets under management at its asset management division.
It said: “Assets under management increased by seven percent, or 70 billion euros, to 1,066 billion euros since the end of 2003. Investments for third parties also grew during this period by six percent, or 34 billion euros, to 599 billion euros.”
Operating profit at the arm rose by 12.7%, from 320 million euros to 361 million euros. It had net inflows of 13 billion euros.
“We have improved our asset_management results despite the strong euro,” said Allianz group controller Helmut Perlet. “We are also on track for profitable growth – as envisaged under the '3+One' program.”
Allianz said it plans to increase assets managed for third parties by 10% and “further improve the operating result”.
The group said total net income in the first half was 1.3 billion euros, an increase of more than 1.1 billion euros compared to the figure for the corresponding prior-year period. "We are on track", said Allianz management board chairman Michael Diekmann.