The German finance ministry has approved the changes to the investment rules for Pensionskassen to offer occupational pensions the ability to further diversify their portfolios in the future.
The changes to the investment rules approved by the finance ministry implement part of the second pillar reform (Betriebsrentenstärkungsgesetz II) drafted by the traffic-light coalition government of Greens, Social Democratic Party (SPD) and the liberal party (FDP).
The finance ministry has officially announced its decision to approve the changes to the investment rules today and changes will enter into force tomorrow, 7 February.
The changes are only a part of the pension reforms drafted by the traffic-light coalition government approved in this legislative period. The investment rules did not have to undergo a vote in Parliament (Bundestag).
With the new investment rules, Pensionskassen are allowed to invest up to 5% of their security assets used to cover liabilities in infrastructure.
Moreover, the new rules increase the risk capital ratio from 35% to 40%, a change that would provide more room for investment of the security assets used to cover liabilities.
Changing investment regulations will make it easier for small insurers and Pensionskassen to invest more in riskier asset classes such as venture capital.
“This [change of the investment rules] enables more investments in sustainable infrastructure of German Pensionskassen and Versorgungswerke [pension funds for professionals]” said Silke Stremlau, chair of Germany’s sustainable finance advisory group Sustainable Finance Beirat (SFB), in a LinkeIn post.
Sofia Harrschar, the new managing director at Palladio Partners, added in another post that the change to the investment rules is a first step.
“The next important step is [to clarify] the corresponding details in the capital investment circular [of financial supervisory authority BaFin]. Overall, it’s positive that regulation is moving [forward],” she added.
Marco Simonis, partner at law firm Clifford Chance, said it was “very positive” the fact that new rules on Pensionskassen investments proposed by the minister of labour and social affairs in June 2024 “don’t have to be picked up again in the next legislative period” because they are already law, and create a solid framework for the pension schemes going forward.
Stefan Friesenecker, client director, private debt and credit alternatives, at Schroders Capital, also praised the changes.
“A positive development, to now promote investments in infrastructure [equity and debt] through a separate quota nationwide,” he said.
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