German bank Metzler and insurer Signal Iduna have formed a strategic alliance to manage pensions across two of Metzler’s pension funds, betting on rising demand for defined contribution (DC) plans in Germany’s fast-evolving occupational pension market.
Metzler Pension Management, part of the bank’s asset management division, and Signal Iduna Pensions-Management will jointly manage pensions for clients of the Metzler Sozialpartner Pensionsfonds and the Metzler Mittelstands Pensionsfonds, a new vehicle for small and medium-sized enterprises (SMEs) created after Metzler acquired a Pensionsfonds previously run by Nürnberger Lebensversicherung.
Christian Remke, chair of the board of directors at Metzler Pension Management, told IPE the bank sought a partner with actuarial expertise to manage beneficiary pensions, traditionally handled by insurers like Signal Iduna, “that is strongly interested also in the topic of the social partner models” with DC plans.
Under the partnership, Metzler provides asset management, including overlay management, while Signal Iduna handles actuarial services and administration, including pension payouts. The insurer also contributes its know-how and systems for the digital management of occupational pension assets.
Metzler continues to receive mandates for its larger pension fund, Metzler Pensionsfonds, where companies either appoint their own pension administrator or the bank arranges one.
“It is not excluded that we work with Signal Iduna, but for now, very strategically, we work together on the Metzler Mittelstands and Sozialpartner Pensionsfonds,” Remke said.
Expected increase in membership
The SME-focused pension fund counts more than 700 company members and over 2,500 individuals, mostly executives, with annual contributions expected in the €20-25m range recorded by Nürnberger Lebensversicherung in the past.
Metzler expects the Sozialpartner Pensionsfonds to grow to 10,000-30,000 members by the end of next year as DC plans under collective bargaining agreements gain traction nationwide, Remke said.
Associations in other federal states could follow the lead of Baden-Württemberg’s private bus operators and Bavaria’s health and care sector union, AWO, in joining the pension funds.
“We will have a very long buildup process until we have a significant number of benefit recipients,” Remke said, adding that DC plans are increasingly gaining momentum.
Metzler anticipates annual contributions of around €30m to the Sozialpartner Pensionsfonds, he added.
Competition
Rising interest in DC plans is expected to intensify competition in the social partner segment.
Allianz Global Investors (AllianzGI) recently launched the Allianz Plug-In Pension for administering occupational pensions (Direktzusage) for SMEs in Germany in partnership with consultancy Lurse.
R+V Versicherung, one of Germany’s largest insurers, supports the social partner model in the chemical industry.
BVV is expanding beyond the financial sector by adding pension management consulting services. This week, the pension provider for Germany’s financial sector signed a strategic partnership with Berenberg Bank covering occupational pensions consulting, strategic asset allocation, asset liability management studies, risk management, and pension administration to support clients along the entire company pensions value chain, Berenberg said.
The partners are now gradually rolling out their joint service offering on the market, the bank added.
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