GERMANY - The MetallRente pension provider saw its assets grow by 4% to €1.4bn in a year when its pensionsfonds posted a negative return of -16.1%.

MetallRente, a multi-employer scheme for metal and electronic industries, offers various pension vehicles including pensionskasse, direct insurance, pensionsfonds and third-pillar Riester.

The pensionskasse and direct insurance, which both have minimum interest rate guarantees of 2.25%, will offer a 4.5% and 5.1% indexation on pension payments, similar to the previous year, thanks their low equity exposure.

Both vehicles saw significant growth last year and increased the total number of members in the scheme by 50,000 to 300,000 - the new members coming from 2,200 companies which joined the scheme and the highest growth since the scheme was introduced in 2001.

Approximately €48m in assets is thought to have accumulated from new clients last year, compared to €51m the year before.

Heribert Karch, chief executive at MetallRente, noted the average contribution had fallen slightly compared to last year, because more members with lower income had joined the scheme.

"Supplementary pension provision has finally reached those who need it to fill pension gaps but sometimes the pension problem is underestimated and contribution rates are set too low," he said.

Asset management for the Pensionskasse, the direct insurance and Riester is outsourced to an insurance consortium.

But Karch confirmed "typically low" equity exposure in all vehicles has "halved".

MetallRente conducts the asset management for pensionsfonds in-house and has an 80% strategic fixed income allocation.

"At the beginning of 2008, long before the current equity crash, we had already reduced the equity quota to a minimum of 11% or 11.5%," Karch explained.

The pensionsfonds returned -16.1% last year, compared to -2% in 2007. (See earlier IPE article: MetallRente posts negative return)

Over a 5-year period, the annualised return is 3.1% "which will increase along with the normalisation of the markets".

The fund is only invested in classic assets, so had no allocation to hedge funds, credit derivatives or "other opaque products" within the portfolio.

MetallRente has a risk management overlay in place and is the only one in Germany to completely apply SRI criteria to its investments.

"We think that companies committed to social responsibility act more sustainably and often pose a lower investment risk," Karch noted.

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