Commerzbank was onto the pensions trail very quickly. Christian Mosel, head of pension fund business, says: “We set up a range of 40 pensions advisers within our branches so that our corporate banking people could talk to their clients on pensions matters.”
But it also saw the need to have something ready by way of a pensions vehicle to be able to meet the pension demands of businesses. “We decided to set up a Pensionsfond jointly with consultants Hoefer last year. The result is the Pensor Pensionsfonds operation, which is 51% owned by Commerzbank and the balance by the consultants. The administration is handled by Hoefer in Mulheim, while the investment is looked after by the Commerzbank team in Frankfurt. Pensor’s operation was among the first of the Pensionsfonds to receive approval earlier this year.
“Our objectives are to provide the trustee, administration and investment functions that clients are looking for. The aim is to provide all the professional advice they need, while acting as an independent pension fund,” says Mosel, who is one of the three Pensor board members. In particular, it wants to carve out a role that is cross-industry and sector and is not insurance company backed.
In addition to Pensor’s deferred compensation services, Mosel points to a wider opportunity. “We see the scope for corporates to hand over their assets and liabilities as they would to an external arrangement under the Anglo-Saxon pension fund model, so that companies would have their liabilities off their balance sheets.” This was one of the government’s aims when introducing the new vehicle.
The fund was structured in a multi-compartment way so that it could work with other banks or insurance companies. “So, clients can have different asset managers, using the fund’s structures, thus leaving the administration and trust functions to us. We would have a duty to vet and satisfy ourselves about the particular asset manager chosen by the client to ensure that all is well.” But the amount of freedom of choice a client will have will depend on the size of the assets involved.
Pensor will offer a range of funds, managed by itself, including a guaranteed fund. “As we give a guaranteed return of 3.25% per annum on this, we insist on doing the asset management for this. This is to compete with insurance-based products. Our aim in fact is to get 5% return annually.” Mosel acknowledges that should Pensor fail to earn the guaranteed figure it will have to find this from its own capital resources. To meet regulatory requirements, Pensionfonds have to have E5m in equity, with another E5m in working capital as a minimum and will likely need more if handling its own administration.
Pensor’s pensioners will have the choice to start receiving the annuity payment by the age of 60. Recent proposals by the government suggest a lump sum payment of up to 20%, but this is not yet approved. Pensor stands for life-long annuities while having reinsured internally any longevity risks beyond age 85 with a prominent reinsurance company. “We will of course continue to pay the annuities at that point, but our outlays will be reimbursed by the reinsurer.”
Mosel believes the Pensionsfond product has more transparency than other pension vehicles. “One big advantage of an arrangement like Pensor is that if an individual employee changes job, they can continue their pension plan with us throughout their career.”
Mosel insists that Pensor will not go into the individual pensions market, although Riester plans will be offered through collective arrangemens with employers as well.
The Pensor approach also brings a greater degree of flexibility into the marketplace. For example, when an asset manager, without any pension services, needs to provide a pension package to a client, it can do so through Pensor, which will provide the contribution collection and other administration services, while the manager focuses on running the assets.

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