GERMANY - Deutsche Post’s recently established Pensionsfonds has employed active managers for its small-cap equities and commodities investments, but has so far shied away from alternative investments, according to group pensions director Benedikt Köster.
The German mail service company transferred €650m in pension assets to the new vehicle from a support fund (Unterstützungskasse) in 2009, and the employer is considering transferring more pensioners in the future, Benedikt told delegates at the annual convention of the German pension fund association Aba.
He said an asset liability modelling (ALM) study for the Pensionsfonds had resulted in a strategic asset allocation of 75% bonds, 20% equities - including large-cap and small-cap, Europe, US and some emerging markets - with the balance invested in “various investments including commodities”.
The Pensionsfonds has remained cautious on other alternative asset classes, including hedge funds, private equity and property. “We excluded real estate as investment for the Pensionsfonds, because we are investing in this asset class with other retirement vehicles in the group,” Köster said, citing one example.
Köster also explained that active asset management had been used “where it makes sense for creating alpha”, which he said related to more “niche” investments, such as those in commodities and small-cap European equities.
The investments of the Pensionsfonds are managed by a master KAG, which has created various sub-funds. Köster revealed that Metzler Asset Management had been hired to implement a risk overlay structure in which long/short strategies and derivatives could be used.
Deutsche Post has a total of €7.1bn in pension liabilities in Germany and €2.1bn in pension assets. Köster told the conference that part of the decision to establish a Pensionsfonds was the reduced levy for the German pension insolvency fund PSV. (See earlier IPE articles: Germany: Pensions at a time of rising PSV contribution rates and German employers propose simplified solvency levy).
The company also considered using a Pensionsfonds as an international vehicle, since Deutsche Post currently has 200 pension plans in 20 countries, but Köster said such a move was unlikely in the near future. “Nobody has gone in that direction yet, but there are first steps and we’ll see how they go,” he said.
Köster also pointed out that the company was considering further transfers into the fund in future, but said active employees would currently stay in the Deutsche Post’s CTA, because “this does not have to be fully funded and had fewer investment restrictions”.
He said Deutsche Post chose the non-insurance Pensionsfonds model, as “it does not make sense for corporates to have to be as conservative in their asset allocation as insurers”.