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German firms plan 'pan-European pensions'

GERMANY – 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 Rauser Towers Perrin.

The consultant found 42% of the companies said they would create a pan-European scheme by 2010, with another 5% saying that it would happen by 2007.

“We found this statistic to be the most surprising of all,” commented Reiner Schwinger, board member at RTP who co-authored of 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% said greater transparency and a better control of operational risks were key benefits.

In compiling its study, RTP queried 71 big companies in Germany, half of which are actually based there and 13 of which are listed on Germany’s blue-chip Dax equity index.

As the other half of the companies are likely multi-nationals who already planned to create pan-European pension schemes, RTP’s chief finding may 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, who have the means to create such schemes.

Last week, Bernhard Wiesner, head of corporate pensions at Robert Bosch, predicted that German multinationals would, in the future, favour Pensionsfonds, Germany’s answer to the equity-oriented Anglo-Saxon pension fund for their individual schemes.

Asked whether he agreed with Wiesner, 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 companies 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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