EUROPE - Siemens, the German industrial giant undergoing management upheaval, has seen the deficit in its principal pension plans reduced to €2.9bn to €1.7bn over the last year due to strong equity markets.

The company, which announced the departure of chief executive Klaus Kleinfeld yesterday, said in its second-quarter earnings statement that an increase in the discount rate helped to decrease the obligations in its defined benefit pension plans.

Furthermore, the increase in interest rates which affected the bond portfolio negatively was offset by very good returns from the equities portfolio.

Plan assets, which totalled €23.5bn at the end of September 2006, returned €849m or an annualised 7.3% which is more than the expected 6.5% return.

Siemens' quarterly revenue rose 10% to €20.6bn while net income was up 36% at €1.259bn.