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Impact Investing

IPE special report May 2018

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Firms in Germany plan pan-European schemes

Nearly half the big companies active in Germany plan to create some type of pan-European pension scheme by 2010 following the emergence of the EU pension fund directive, according to a new study by consultant Rauser Towers Perrin.
The consultancy firm found 42% of the companies said they would create a pan-European scheme by 2010. Another 5% said that it would happen by 2007.
“We found this statistic to be the most surprising of all,” said Reiner Schwinger, board member at RTP, who co-authored the study. “Many of these companies also said Germany would be the place where they would create the schemes, so this is a good thing for the financial centre of Germany.”
Of the benefits related to creating a pan-European pension scheme, 85% of the companies said the chief one was more efficient portfolio management. Another 80% cited greater transparency and a better control of operational risks.
In compiling its study, RTP queried 71 companies in Germany. Half of them are based there and 13 are listed on Germany’s blue-chip Dax equity index.
As the other half of the firms are likely to be multinationals which already plan to create pan-European pension schemes, RTP’s chief finding might not be that surprising.
RTP did not disclose the names of the firms. It said its study was “very representative” of companies, listed or not, which have the means to create such schemes.
Bernhard Wiesner, head of corporate pensions at Robert Bosch, predicted recently that German multinationals would, in the future, favour Pensionsfonds, Germany’s answer to the equity-oriented Anglo-Saxon pension fund, for their schemes.
Asked whether he agreed with Wiesner’s view, Schwinger said he could not make any predictions.
“The Pensionsfonds were certainly greatly strengthened as part of the government’s transposition of the EU pension fund directive last year,” he said. In that move, the government made it easier and less costly for German firms with pension liabilities on the balance sheet to transfer those obligations to Pensionsfonds.
“Pensionsfonds are clearly ready to go, but some sticking points remain,” Schwinger added, citing for example a debate over how to define the coverage ratio for the vehicles.

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