GERMANY – The MetallRente pension fund has attributed its 11% return for 2012 to a recent asset liability management (ALM) study and shift in asset allocation.
In October 2011, the scheme – which manages €3bn in a number of pension vehicles – created an asset pool with the view to diversifying its “Europe-biased” strategy.
Further, it set out to focus more on sustainability, while increasing exposure to emerging market debt and equities.
A spokesman at the scheme told IPE that an ALM study conducted at the end of last year had validated the pension fund’s current asset allocation.
“We are therefore not planning any major changes to our portfolio at the moment,” he added.
The fund continues to opt for high exposure to equities, which accounted for 80% of the portfolio for young members of the Pensionsfonds at year-end 2012.
By comparison, the average equity exposure for DAX-listed company pension funds is approximately 25%, down from 30% in 2007-08.
“To get reasonable interest on capital,” MetallRente’s spokesman said, “institutional investors have no choice but to shift money out of allegedly safe investments into equities – within their regulatory scope.”
Consultancies Towers Watson and Mercer both recently calculated the average 2012 return for DAX pension funds at 10%, driven largely by last year’s equity rally.
Despite the positive returns, average funding levels dropped to 61%, with Towers Watson acknowledging a “wide spread” in funding depending on the company.
Deutsche Bank and SAP, for example, boasted the highest funding levels at more than 90%, while funding for the Deutsche Telekom scheme dropped to just 19%.
The consultancy acknowledged that DAX companies’ pension funding levels were based only on plan assets put aside for defined benefit obligations.
But it also pointed out that all companies, if necessary, could draw from their equity for their pension funds.
“In total, DAX companies’ pension liabilities are 93% covered in the balance sheets,” it said.
Last year, pension fund sponsors had to pump €10.5bn into their schemes, with Deutsche Post paying the most at €2.3bn.