GERMANY – Bernhard Wiesner, head of corporate pensions at Robert Bosch, says German multinationals will favour Anglo-Saxon-style Pensionsfonds due to the EU directive on occupational pension funds.
They would prefer this arrangement to contractual trust arrangements, he told a pensions conference in Berlin sponsored by Handelsblatt.
Numerous German multinationals – including almost 20 traded on Germany’s Dax equity index – have removed pension liabilities from their balance sheet to fund them via CTAs.
International accounting standards, which apply to all listed companies, regard the external funds as an effective way of financing pension liabilities.
Industry experts expect that CTAs will be created for at least €15bn in liabilities this year.
However, Wiesner said that now that the EU permitted multinationals to create pan-European schemes, German Pensionsfonds, rather than CTAs, were the appropriate vehicle for the endeavour.
The Institutions for Occupational Retirement Provision (IORP) directive came into force last September.
“The creation of pan-European pension funds is attractive for these companies as they permit them to bundle asset management, controlling, administration of pensions,” Wiesner told delegates.
“Since CTAs offer neither portability nor can be run on a European level, I expect that many, though not all, German companies employing CTAs will switch to Pensionsfonds in the mid- to long-term,” he said.
Wiesner added that it was his expectation that Bosch itself would create a pan-European pension fund. He did not provide a timeframe.
Created by the Riester pension reforms of 2001, Pensionsfonds are equity-oriented vehicles that, like those in the Anglo-Saxon world, follow the prudent man rule to investing.
Bosch’s own Pensionsfonds, which Wiesner heads, expects to have €500m in assets by the end of 2006. Last month, the Stuttgart-based company began providing a top-off to the defined contribution scheme, which insures its 110,000 German employees.
Yet the auto component giant, which employs 250,000 people worldwide, still has some €7bn in pension liabilities on its balance sheet.