mast image

Impact Investing

IPE special report May 2018

Sections

Germans prepare to ease on liability

Pensionsfonds are set to become much more competitive under plans by the German government, according to a senior official in the social affairs ministry.
Pensionsfonds, the equity-oriented corporate pensions vehicle created in 2001, were Berlin’s answer to the Anglo-Saxon pension fund, which has fewer restrictions on investments in equities. Germany’s traditional fund, known as a Pensionskasse, is limited by law from investing more than 35% in equities.
Pensionsfonds were intended to be an improvement on the Pensionskasse, which currently account for around e73bn of the e342bn in total German pension assets.
Yet three years later, Pensions-fonds have not been able to attract more than a small fraction of German pension assets. German pension experts say this is mainly because the vehicle has not been able to lure assets away from the Direktzusage (book reserves) vehicle, which accounts for 60% of the total pension assets.
The problem, these experts say, lies with the Rechnungszins – a discounting figure used in calculating how pension obligations can be met by a company. The higher the Rechnungszins, the lower the capital reserves a company must build to meet those obligations, and vice versa.
The Rechnungszins for book reserves is 6%, while for Pensionsfonds it is 2.75%. Hence, there has been no incentive for companies using Direktzusage to transfer their assets to Pensionsfonds, as this would require the building of significant capital reserves.
Peter Görgen, responsible for supplementary pension provision at the ministry, said that as part of its transposition of the EU pensions directive, the government was considering adjusting the Rechnungszins to facilitate the transfer of assets from Direktzusagen to Pensionsfonds.
“The transposition will ultimately be done by lawmakers, but we in the government have no objection to adjusting the Rechnungszins, so we will make a recommendation to do so,” Görgen said.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2435

    Asset class: CLOs.
    Asset region: Global.
    Size: USD 50m.
    Closing date: 2018-05-22.

  • QN-2436

    Asset class: Real Estate - Core Open-ended Real Estate Equity Fund (non-listed).
    Asset region: Asia Pacific.
    Size: Approx. CHF 70-100m per investment.
    Closing date: 2018-05-25.

  • QN-2438

    Asset class: High Yield Bonds.
    Asset region: US.
    Size: USD 300 million.
    Closing date: 2018-05-25.

Begin Your Search Here