The funding levels of DAX-listed companies’ pension plans fell from 68% to 66.6% in the first half of the year. 

This was caused by lower returns and increasing liabilities, according to an update from Willis Towers Watson.

Plan assets decreased by 0.3% to €257.1bn, the consultancy noted in a statement. 

It added that this was mainly because of limited performance in European stock markets, and foreign exchange effects. Liabilities were calculated to have increased by 1% to €385.9bn, according to the consultancy.

Not all of the DAX companies fully fund their pension plans, but they will have to prepare for a further increase in liabilities.

These have increased by 100 basis points to €385.9bn over the first half of the year as companies had to apply a lower discount rate in their calculations.

With the publication of new longevity tables these liabilities were due to increase by another 1% to 2.5%, according to the consultancy. This depends on each company’s individual situation and, in particular, the reporting standard it applies. 

A greater burden on DAX companies’ balance sheets, however, is the still unsolved question of the discount rate to be applied under German tax law, an issue Willis Towers Watson drew attention to.

The rate has been fixed at 6% and not been amended for 37 years, which has increased the spread over other parameters. The discount rate to be applied under German HGB accounting standards has by now fallen to 3.42%.

This discrepancy has cost companies up to €25bn between 2008 and 2014 alone, according to estimates by economics research centre Institut der Wirtschaft in Cologne.

Lowering the tax-related discount rate would increase the taxable value of pension reserves.

At the end of last year, experts challenged the tax-related rate as unconstitutional and the case has been filed at the constitutional court.