Versorgungswerk der Presse, the provider of pension provisions for employees in the German communications and media industry, has piled up “enough reserves” to invest in asset classes with attractive risk-return profiles such as infrastructure or other alternatives, chief executive officer Manfred Hoffmann told IPE.
The scheme has invested in fixed income with a focus on a very accurate asset-liability management approach, he said, adding that it currently turns to illiquids to generate returns.
Hoffmann said: “Low interest rates and volatility are here to stay. We will continue to minimize downside risks and focus on diversification while taking advantage of market opportunities.”
The scheme’s investment portfolio is broadly diversified in more than 50 asset classes and invested in various countries, regions and currencies, according to its latest financial statement.
Its portfolio includes government bonds in developed countries (24%), corporate bonds (21%), government bonds in emerging markets (14%), equities (11%), mortgage lending (10%), real estate (8%), secured loans (7%), and infrastructure, renewable energy and convertible bonds making up 5% of the portfolio.
The scheme holds 77% of capital investment in nominal values, and 94% have an investment grade rating.
Besides nominal values, 23% of the capital investment is deployed in value assets, including equities, real estate renewable energies and infrastructure.
The net return was 4.1% last year compared to 3.8% in 2018. The book value of security assets rose year-on-year by 2.9% to €6.7 bn at the end of 2019.
The valuation reserves grew from €1.1bn to €1.9bn based on a broad increase in value in almost all asset classes. This corresponds to 28.9% of the book value at the end of 2019, the statement disclosed.
“The Presse-Versorgung has had an excellent new business growth of more than 30% last year,” Hoffmann said.
It recorded an increase in new businesses of 36.1% to 6,640 members. The sum insured rose by 34.1% to €285.8m. Contributions were also up by € 7.1m to €334.7m.
“Our customers enjoy a profit participation of up to 3.7% in 2020,” Hoffamn said.
The scheme will, however, stop taking on new businesses for its Pensionskasse product from 1 October 1.
“It was a formality – we have never had our own Pensionskasse but implemented this form of corporate pension as part of the Allianz-Pensionkasse when deferred compensation (Entgeltumwandlung) was introduced by law in Germany in 2002,” Hoffmann explained.
The demand for the Pensionskasse product was non-existent for a number of years, and closing it for new businesses reduces complexity and costs.
The fund has always focused on direct insurance (Direktversicherung), Hoffmann said.
“When the law changed in 2005 and deferred compensation opened up for direct insurance, most of our customers moved away from the Pensionskasse,” he said.