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Impact Investing

IPE special report May 2018


German Pensionskassen expect regulation-driven consolidation

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More than three-quarters (77%) of German Pensionskassen professionals expect further consolidation in the sector, a study by Willis Towers Watson has shown.

For more than half of the respondents, the main reasons pushing consolidation were hurdles regarding “current operative, administrative and regulatory demands”.

Another 26% mentioned “strategic positioning to face future challenges” as a major imminent problem.

These challenges were seen as a greater problem for the near future than the low interest rate environment, according to 22% of respondents.

This was in contrast to recent findings by the German supervisor BaFin , which noted after the latest stress test that several providers could need additional top-up payments.  

Two Pensionskassen have already been sold to insurers in so-called run-off deals

Between 2004 and 2016 the number of Pensionskassen in Germany shrank from 158 to 138.

Over the same period the assets managed by these providers of occupational pensions increased from €80bn to €156bn.

Apart from increasing national and international regulatory demands, the new legal framework BRSG that came into effect earlier this year placed new demands on insurance-based Pensionskassen.

Several have already reported on preparations to offer pension plans without guarantees under the new rules, once unions and employers have reached agreements on how benefits should be structured.

For those not planning to enter the new market, Willis Towers Watson said it expected further cooperation, outsourcing or the creation of joint ventures.

“Some are looking into possible synergies with other Pensionskassen or into outsourcing certain services like administration, investments or IT,” explained Heinke Conrads, head of occupational pension consultancy at Willis Towers Watson in Germany.


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