GERMANY – German companies listed on the DAX and MDAX indices have reported slightly improved funding figures for their pension schemes despite the low interest rate environment.

A slight increase in discount rates helped lower pension fund liabilities to €312bn, 60 basis points lower than at the beginning of the year, according to Towers Watson’s latest ‘German Pension Finance Watch’.

The consultancy cited a slight downward adjustment on future inflationary expectations – which will reduce indexing on existing defined benefits plans – as an additional factor in the lowering of the discount rate.

For companies listed on DAX, the main German stock exchange, this means assets of €192.1bn cover more of the pension plan, nudging the funding level from 61.2% to 61.6%, the consultancy said.

Medium-sized companies in the mid-cap MDAX index also profited from good equity returns in the first half of the year.

Thomas Jasper, head of the occupational pensions business at Towers Watson Germany, said: “The equity exposure in the pension portfolios of MDAX companies amounts to more than one-third (37.2%), while the DAX companies only invest one-quarter (24.7%) in equities.”

Over the first half of 2013, MDAX companies saw liabilities drop by 60bps to €37.5bn and assets increase by 100bps to €16.4bn.

In total, this led to a slight improvement of the funding level to 43.7% from 43.1%.

This is a more positive development than that of the average euro-zone pension plan Towers Watson considers for its regular ‘Global Pension Finance Watch’ update.

For this model pension plan, the consultancy calculates a 0.2% return for the first half of the year.

Liabilities in this plan fall by 220bps over the period, as the benchmark discount rate increases up from 3.42% to 3.64%.