The pension liabilities of Germany’s largest companies have expanded by almost a fifth since the beginning of this year, because of further pressure on discount rates, consultancy Willis Towers Watson reported.

But despite the development, funding ratios have remained relatively stable because corporates have made investment returns on their pensions assets of around 10%, the firm said in its report on German pensions finance for the third quarter of 2019.

Heinke Conrads, leader of the firm’s German and Austrian retirement business, said: “The companies have had a strong headwind this year for their pension schemes from the development of interest rates, but also a strong tailwind through the positive development on capital markets.

“Overall, it is clear that they have chosen their capital investment strategies well and were able to manage their pension schemes well,” she said.

Pension scheme funding levels for companies covered by the report – those included in the DAX and MDAX stock market indices – fell by around a fifth since the beginning of 2019, according to WTW’s modelling.

For DAX company pension plans, funding levels fell to 62.3% at the end of September from 67% at the end of December 2018 while funding of plans at the slightly smaller MDAX firms dipped to 58.3% from 63.1%, the consultancy’s figures showed.

However, this decline was much smaller than could have been expected given the significant increase in pension liabilities in the nine-month period, WTW said.

This showed the companies were working intensively on their investment strategies specifically for their pensions assets, it said.

According to the firm’s own calculation of the average discount rate for DAX companies, this rate sank to just 0.94% at the end of September, from 1.91% at the of December 2018.

WTW’s figures showed the decline of the discount rate seen in the first nine months of this year was the biggest in percentage point terms since at least 2014, and comes in a period when 10 and 30-year bonds have turned negative.

Examining the outlook for the background conditions that determine interest rates, the consultancy said in its report: “All in all, low eurozone interest rates are expected to persist for several years yet.”