GERMANY - PHH, a €346m Pensionskasse for employees of Hamburg's elevated railway, has reported a net return of 5% on its assets for 2006 - unchanged from the previous year.

However, PHH's return is on par with other German insurance-type pension schemes and more than double a guaranteed minimum of 2.25%.

Last month PKDW, an €1.1bn multi-employer scheme, and BVV, a €18.6bn fund for Germany's financial sector, reported net returns of just 5.1% for 2006.

Returns at German Pensionskassen have been held down by their huge exposure to fixed income and PHH has 70% of its money in that asset class.

At the same time, PHH also said in its annual report it had earmarked €6.2m from its capital market earnings last year for reserves now totalling €333.5m.

"The risks stemming from capital markets have been met through diversification of our portfolio and through the implementation of an efficient risk-management system," PHH said in the report.

Beyond the 70% in bonds, PHH has 17.6% in shares and other unnamed non fixed-income vehicles while a further 10.8% is directly invested in German property and 1.4% is held in cash.

PHH insures around 4700 employees at Hamburg's elevated railway. Its pensioners number 2800, to whom it paid out €10.7m in benefits last year.

In other news, MLP, a German IFA which has a majority stake in German consultant Feri, said today it had closed its loss-making operations in Spain and the UK.

Clients as well as some staff and advisers will be turned over to domestic players in those markets.

"We will now only focus our activities in profitable markets. This includes Germany, Austria and the Netherlands," MLP said.

MLP added it would take a charge of several million euros for these closures but insisted it was on track to meet its pre-tax profit (EBIT) forecast of €110m for 2007.