GERMANY - Technology giant Siemens has set up an Anglo-Saxon style Pensionsfonds, says German financial services regulator BaFin (Updates with clarification from Siemens).
A spokeswoman for Siemens in Munich confirmed the move to IPE. She said Siemens would transfer "most but not all" of the €14bn in assets from its current pension fund - a contractual trust arrangement - to the Pensionsfonds vehicle. Siemens' CTA, known as Siemens Pensions Trust (SPT), will not be disbanded.
The spokeswoman also said the Pensionsfonds would be run by two Siemens managers, adding that Wolfgang Lotze, the current head of SPT, would be part of the vehicle's supervisory board.
Asked whether there would be any changes on the investment side, like for example a search for new asset managers, the spokeswoman replied that none were planned. Siemens Financial Services, the firm's financial arm, acts as one of the asset managers for SPT.
Siemens is the third German company to have set up a Pensionsfonds. The others are auto component maker Robert Bosch and Deutsche Telekom, the telecoms giant. Bosch's Pensionsfonds is the biggest, with assets expected to reach €500m by the end of 2006. In all, there are 25 German Pensionsfonds, with the others mainly tied to insurance companies and banks.
Created by the government in 2001, the Pensionsfonds is an equity-oriented vehicle regulated by the BaFin. It was meant to be a liberal alternative to the Pensionskasse, Germany's traditional pension fund which is tightly regulated by the BaFin.
But in choosing an external fund for pension obligations, Siemens and other big German companies have preferred CTAs - vehicles that are not regulated by the BaFin. Beyond Siemens, nearly 20 Dax companies have CTAs in place.
Nonetheless, because they are domestic solutions, CTAs do not permit internationally-minded companies like Siemens to create pan-European schemes. Pensionsfonds do, which is why German pension experts believe that in the long term, such companies will favour the vehicle over CTAs.
One of these experts is Bernhard Wiesner, head of corporate pensions at Bosch. Speaking at a pensions conference in Berlin last March, he said: "Since CTAs offer neither portability nor can be run on a European level, I expect that many, though not all, German companies employing CTAs will switch to Pensionsfonds in the mid- to long-term."
"The creation of pan-European pension funds is attractive for these companies as they permit them to bundle asset management, controlling, administration of pensions," Wiesner added.