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BAV examines equity quota for new German pensions

GERMANY – The Bonn based BAV German insurance regulator is putting together proposals that could liberalise investment for insurance companies and move the country’s newly ratified ‘pensionfonds’ vehicle more in line with the forthcoming European directive on pension funds.

The new ‘pensionsfond’ private pensions vehicle ratified by Germany’s Bundesrat last week comes under insurance regulation.

Volker Greve, a civil servant at the BAV told IPE-Newsline: “We are working on the investment rules for the pensionfonds, but I am not authorised to give further information.”
He commented that while the current ceiling on equity investments for insurance companies was 30%, this could go higher with regards to normal calculation methods.
“ We count this percentage though on the book value and the book value is quite a lot lower than the market value – so 30% means normally 50% market value.
“ I can’t give exact information on what is happening because we are not the competent body to do so and the investment rules are published by the Ministry of Finance, but everybody expects a small liberalisation of investment rules for insurance companies and maybe we will get a little higher percentage that could influence this 30% quota to maybe 35% or 40%.

Greve declined to comment on any timescale involved in producing proposals for the government, however he noted that the question of pensionfond investment had been brought up in light of EU moves to bring in the prudent investment principle in the forthcoming pensions directive.
“ With the future investment rules for pension fund this question is definitely open.
“ We know that if we have the pensions directive from the EU that there is a quota of 70% in shares and other risk capital.
“If the pension rules are more liberal and you can make your own investment rules then you can expect what it might be.”

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