German pension funds for professionals (Versorgungswerke) are trying to vehemently fend off allegations of poor investment decisions made and resulting in losses, following a series of reports highlighting risks taken by the schemes as they started to shift to private markets during a prolonged phase of low interest rates.
The Versorgungswerk der Zahnärztekammer Berlin (VZB), the pension fund for dentists in Berlin, Bremen and the state of Brandenburg, said in a statement that it has a reserve worth €145m, as published in the 2023 annual report.
VZB is financially sound and can fulfil its statutory promises in terms of paying benefits to its members, on the basis of its annual financial statements and actuarial report for 2023, it added in a bid to improve transparency towards its members.
VZB is one of the main investors in now insolvent start-up Element Insurance, and it has written off assets worth around €64.93m in 2023, and €45.98m in 2022, according to its 2023 financial statement.
Insolvency administrator Friedemann Schade spoke to the Frankfurter Allgemeine Zeitung and the Tagesspiegel newspaper, saying that averting Element Insurance’s insolvency was no longer possible.
Today, the German financial supervisory authority, BaFin, said that a district court in Berlin opened the final insolvency proceedings against Element on 1 March, as no solution was found in the form of a transfer of assets or partial transfer of assets within the framework of the preliminary insolvency proceedings, and the company’s excessive debt.
VZB is currently reviewing individual statements legally to obtain “targeted corrections” if necessary, it said, referring to news reports published in the past weeks on the scheme and pension funds for professionals in general.
Many of these reports contain incomplete, inaccurate or distorted representations that create a false overall picture, the scheme added.
Signa holdings
Hessische Zahnärzte-Versorgung, (HZV), the pension fund for dentists in the state of Hesse, clarified in another statement that it is not involved in Element Insurance or in now-insolvent European real estate group Signa Holding.
Signa is the largest insolvency in Austria’s history, a result of the real estate crisis in Europe.
According to reports, banks and institutional investors in Austria, where Signa is based, and Germany, including pension funds for professionals, lent money to Signa, or are shareholders in Signa’s companies.
“It was a well-considered, active business decision by those responsible at HZV not to enter into any such investments, such as in Element-Versicherung or René Benko’s Signa Holding,” the pension scheme noted, referring to Signa’s founder René Benko now held in prison on suspicion of fraud and corruption.
HZV stated that it does not hold mezzanine investments or investments in real estate projects, because returns from those investments are offset by high risks.
“We have therefore actively decided against mezzanine capital and against financing real estate project developers. This is why we are not affected by write-downs here either,” it added.
The scheme said that pension funds have made profits with these investments in the past, which some investors are now internally offsetting.
It pointed at a blanket attempt to create the impression in press reports that all pension funds have allocated assets in such investments during the phase of negative interest rates, adding that “this is not true”.
The pension fund for dentists in the Westfalen-Lippe region in the state of North-Rhine Westphalen (Versorgungswerk der Zahnärztekammer Westfalen-Lippe, VZWL) also said that it is not involved in Element, Signa, and that it has not written off assets.
The latest digital edition of IPE’s magazine is now available
No comments yet