GERMANY – The liberalisation of German insurance companies’ investment criteria has taken a step forward with the German Ministry of Finance finally proposing to raise the quota for equity investments from 30% to 35%.

The reform, which is still at the discussion stage could be implemented by January 1, 2002.
It follows on from the Bonn based BAV German insurance regulator’s suggestions that restrictions on the German insurance industry be freed up to encourage investment in the country’s new ‘Pensionfonds’ retirement vehicle.

The BAV had speculated that the maximum 30% investment ceiling might be raised to some where between 35% and 40%.

Hans Karl Kandlbinder of Munich based Investment Beratung für Institutionelle Anleger is optimistic about the impact the reform will have on the German pension fund industry: “It means that insurance companies will be less restricted by fixed income investment strategies and will be able to place more and more money in pension funds.”