GERMANY - German employers with book reserve pension schemes could face a fourfold increase in the levy they pay into the pension protection association (PSV) next year, IPE has learnt.
"By the end of May, the PSV had already taken on more pension obligations than over the whole of the last year", said Martin Hoppenrath, head of the association.
However, the fund is now facing one of the largest insolvencies in recent German history as the retail giant Arcandor is expect to burden the PSV with €1bn in pension obligations. (See earlier IPE-article: Arcandor pensions could face the PSV)
The PSV had seen only €600m in obligations from insolvent schemes last year compared to €943m in 2007.
The levy, which is calculated at year-end according to the amount the PSV has to pay out, was 0.18% of the total of German pension assets registered with the association.
On average, every company offering some form of pension scheme has had to pay around 0.33% of liabilities in levy annually.
"If the loss amount reaches €1bn, a levy of around 0.4% will be needed. if it reaches €2bn it will be around 0.8%," estimated Hoppenrath.
That said, Hoppenrath does not see a problem in taking on the Arcandor pensions: "It isn't nice but bigger insolvencies are only more work."
He pointed out that the levy paid by the companies according to the size of their pension scheme amounted to only €50 per pension fund member "which is far less than many other social security fees that employers have to pay".
Calculating the levy is expected to be based on €273bn in total German pension assets this year.