The German multi-employer occupational pensions provider Höchster Pensionskasse has taken the opportunity offered by rising interest rates to increase loan investments.
The amount of “other loans”, as the Pensionskasse call the investments in its latest financial statement, and including registered debt securities and loans, shot up from €830m in 2021, to €1.19bn in 2022.
The scheme also exploited the increase in interest rates to build up its direct bond investments with good credit ratings, it said.
It recorded net returns on invested assets of 3.10% last year, outperforming the forecast in the previous year’s report, it said. For 2023, the pension fund’s management board expects net returns on investments (excluding special effects) of slightly below 3%.
The Pensionskasse downplays the risks of recession, expecting instead increased volatility in capital markets that can significantly affect the risk-bearing capacity of new investment opportunities.
Therefore, the fund’s investment policy and existing risk-bearing capacity are continuously reviewed and adjusted if necessary.
Assets under management increased by 8.1% year-on-year, from €2.81bn in 2021 to €3.04bn in 2022, as a result of the positive performance and contributions, and low expenses for pension claims.
Assets invested by the scheme increased by €327m, or 12.5% in 2022, compared with 10.7% growth in 2021, to €2.94bn, as per the statement.
The scheme monitored its asset allocation last year, given multiple crises, and in line with developments in capital markets, adjusting it when necessary, it said. It cut down on assets invested in mixed Spezialfonds by €49m, or 5.4%, to €857m in the last financial year.
Alternative investments in the SICAV-RAIF Höchster Vorsorge S.A. company, set up in 2020 almost doubled, from €36m in 2021 to €71m last year, with a significant growth recorded especially by loans, from €364m to €1.19bn year-on-year.
Höchster Pensionskasse has sufficient liquidity coming mainly from contributions and returns on investments to meet all obligations, it added.
Although, the amount of contributions decreased year-on-year in 2022 to €168m, from €171m in 2021. The scheme caters for 592 companies and 312,778 members.
The scheme expects a slight decline in the volume of contributions and new businesses this year, it said, adding that the chances for members and the pension fund itself arise from the social partner model (Sozialpartnermodell), signed by representatives of the employers and employees in the chemical sector last year.