Assets at Inarcassa, the Italian pension fund for self-employed engineers and architects, have reached an historical high level close to €12.5bn at the end of the first half of this year based on current market value, up from €12.2bn recorded May, it said in a note.

Gross returns on assets stood at 4% in the first half of the year on the back of financial markets’ positive performance.

Inarcassa pointed at the positive performance of equity markets for developed countries (13.29%) and emerging markets (6.95%), adding a further 2.25% and 0.55%, respectively, in June to the positive performance recorded in the past months, it said.

The pension fund’s board of directors has decided to adjust its asset allocation in line with its investment strategy through a slight reduction of absolute return investments, while increasing investments in bonds issued in emerging markets and in US dollars.

Sustainable investments continued to grow, making up almost 50% of Inarcassa’s assets, it added.

The pension fund said in a previous note that it is also continuing with allocations in illiquid assets, namely private debt funds. It will invest to finance Italian small and medium-sized companies.

DAX companies’ pension assets rise

In other news, in Germany pension assets at the largest firms listed on the DAX index also grew by 2.6% to €272.8bn in the second quarter of this year, according to Willis Towers Watson’s German Pension Finance Watch report.

Pension assets for mid-sized companies listed on the MDAX index rose by 3.9% to €77.1bn during the same period.

As a result, the funding level of company pensions, the ratio between pension assets and obligations, rose to 71.9% for companies listed on the DAX, compared to 70.8% in Q1 and 65% at the end of 2020, up 6.9 percentage points year-to-date.

“The last time that pension funds of DAX companies achieved such a high level of funding was before the Lehman [Brothers] crisis, in the 2007 financial year,” said Heinke Conrads, head of retirement Germany and Austria at WTW.

The funding level of DAX companies’ pension funds has remained stable since the crisis at around 65% despite fluctuations on the capital market, she added.

The funding level of pension plans for companies listed on the MDAX index reached 66.6% in Q2, compared with 65% in Q1 and 59.6% at the end of 2020, up 7 percentage points year-to-date.

The increase in pension assets was the result of positive developments in equity markets in 2021. Returns on investments in world equities were up by 16.8% year-to-date, followed by European equities (15.3%) and real estate (9.6%). Bonds meanwhile recorded a negative performance of -2.3%.

An increase of the discount rate of 40 basis points in the second quarter of this year compared with the end of 2020 led to a reduction of pension obligations by around 7%, WTW said.

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