The Pensionskassen for the catholic aid organization Caritas and its affiliate Kölner are liquidating their pension businesses following a restructuring process.
The duo will, however, continue to operate for a “very long period of time” in order to phase-out the existing pension contracts of the members, they announced. Existing contractual relationships or other agreements do not fall under the process of liquidation, the funds said.
The German financial regulator – BaFin – has also revoked the license to operate both schemes’ insurance businesses based on Section 304 Paragraph 1 No. 2 of the Insurance Supervision Act (VAG).
According to such section, the Pensionskassen are not allowed to sign new insurance contracts or extend existing insurance contracts.
The liquidation is the last step in a long process undertaken by the pension funds in an attempt to restructure their balance sheets. The Pensionskassen had laid out a recovery plan to guarantee pension payments for the insured.
BaFin had previously allowed reserve funds to be cut after it banned Caritas Pensionskasse from taking on any new business. Kölner Pensionskasse also stopped taking on new business due to lack of funding.
Last summer, the Pensionskassen highlighted the positive results of the restructuring plans, stating that they were able to build up their own capital resources to reinforce risk-bearing capacity.
Caritas recorded profits for €5.42m in 2019, a result driven mainly by positive development on equity markets and income from capital investments, it said.
But the ban on new business led to a reduction in the number of insured in the fund to 24,241 in 2019 compared to 24,760 in 2018. Income from contributions fell by 3.66% to €9.03m compared to €9.37m the prior year, while €30.86m in benefits were paid.
Kölner Pensionskasse, too, achieved surprising returns, it said, with profits reaching €16.85m in 2019, and €9.99m allocated as reserves for premium refunds.
The ban on new business had an impact on the fund with a reduction in the number of insured to 30,810 in 2019 compared to 31,553 the prior year. Income from contributions fell in 2019 by 14.39% to €18.77m compared to €21.92m in 2018, while €15.95m in insurance benefits were paid.