BVV, the pension provider for the German financial sector, is strategically changing its investment targets this year, boosting investments in directly held bonds by 10%, according to a report of the scheme’s annual general meeting (AGM).
The pension fund is also planning to slightly increase allocations to infrastructure by 0.7% this year, while cutting down investments in real estate (-1.6%), equities (-4%), alternative debt investments (-0.9%) and bonds managed through mandates (-5.2%), the report added.
According to its strategic asset allocation, BVV targets 50% of its assets in directly held bonds, 5% in bonds managed through mandates, 8% in equities, 13.5% in alternative debt investments, 5.5% in infrastructures, 8% in real estate, and 8.5% in private equity.
BVV’s assets under management increased year-on-year in 2022 by €573m to €33.6bn, however, returns on investments fell by €782m, from €1.95bn in 2021 to €1.17bn last year.
The scheme recorded an annual profit of €10m last year, significantly down from €250m in 2021, while contributions fell year-on-year by €19m in 2022 to €711.5m in 2022.
Frank Egermann, a member of the scheme’s executive board responsible for portfolio management, described 2022 as a solid financial year for the pension fund, despite an extremely negative market environment.
The report added that 60% of BVV’s portfolio is invested in equities and bonds, two asset classes that have recorded large losses last year. At the end of the 2022, BVV had 358,348 members entitled to pensions, 132,599 pension recipients and 761 member companies.
New pension management company
BVV has also established a new company, BVV Pension Management, to concentrate services for members in one unit from 1 September, according to the fund’s report.
The financial supervisory authority, BaFin, has given its go-ahead to outsource tasks to the new company.
BVV Pension Management is a subsidiary of Pensionskasse BVV Versicherungsverein, one of BVV’s three pension providers alongside the support fund (Unterstützungskasse) BVV Versorgungskasse, and the BVV Pensionsfonds.
The outsourcing of administrative tasks from BVV Versicherungsverein to BVV Pension Management was decided at the fund’s AGM to provide future services related to company pension schemes requested by members and sponsoring companies, and other interested parties.
BVV group’s net assets, financial position and results of operations continue to be significantly impacted by the business development of the BVV Versicherungsverein, that reinsures the obligations of the BVV Pensionsfonds.
The group is repositioning itself in a dynamic occupational pension market, having decided last year on the possibility of managing future pension schemes outside of the financial services industry, and adjusting the structure this year to expand its range of services, it said.