New e4bn German pension scheme out to tender
GERMANY – The German metal and electronics industry representative bodies have invited investment managers to tender for the assets of a new €4bn retirement savings scheme, which could potentially have a membership of around four million workers.
The new scheme, to be called Altersversorgung Metall und Elektro (AME), will essentially be a joint venture set up by the Gesamtmetall employers association, and IG Metall, the metal, shipbuilding, clothing and textiles union.
No formal location for the fund has yet been decided, but it will be run as a separate incorporated company by a small dedicated team pulled from both Gesamtmetall and IG Metall.
The fund will offer employers the chance to choose between offering employees one of Germany’s three main retirement savings structures: pension funds; Pensionskassen or direct insurance.
Altogether, nine undisclosed leading asset management and insurance firms in Germany have been asked to tender, based on the following main criteria: reporting methodology and transparency; experience of managing large funds and accounts and the speed and efficiency with which they could get funds up and running.
The bids are expected to be in by next month with the fund going live as soon as next January.
There is no formal fund size at the moment and investment strategies will be dependent on the way the scheme is eventually structured. “Germany has a very tight asset allocation regulatory system, and we can’t say yet how the fund will be invested until we know if it will be a pension fund, insurance contract based or a more traditional Pensionskasse,” says Gesamtmetall’s press spokesperson, Martin Leutz.
The concept behind the new scheme has been inspired by recent pensions reforms and debate in both Germany and Europe, says Leutz, who puts membership at a more conservative two million since their will be no legal obligation to join the scheme and the scheme itself is not intended to replace existing arrangements. “Basically changes in the law are allowing the market to open up, as employers and employees alike realise that current retirement provision simply won’t be enough,” he comments.
Consultancy firm Dr Dr Heissmann has been consulted on all aspects of the new scheme and is expected to continue this role once the venture is active. “Since neither we at Gesamtmetall or our colleagues at IG Metall have the knowledge or experience in this area, bringing in a consultancy firm on all levels is seen as essential,” says Leutz.