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Pension coverage must grow, argues German banking fund

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  • Pension coverage must grow, argues German banking fund

GERMANY – A board member at Germany's pension fund for the banking industry, BVV, has said he hopes the country's next government will push to increase coverage of occupational pension coverage.

With federal elections due in the autumn, Helmut Aden said he did not anticipate any substantial changes to regulation for occupational savings arrangements (bAV) prior to the poll.

However, he added: "We hope that the time afterwards will see positive legislative impulses for the continued expansion of the bAV in Germany.

"Comparisons with other European countries show we have a significant amount of catching up to do, if we wish to achieve adequate levels of old-age benefits in future."

His comments came as the fund announced annual returns of 4.4% for 2012, with contributions increasing to nearly €562m and returns from BVV's investment portfolio up by 1 percentage point to €218m.

Heribert Karch, chairman of pension association aba, has repeatedly spoken out in favour of auto-enrolment in Germany as a way of increasing coverage and the level of second-pillar savings.

The €23.3bn banking industry fund, Germany's largest Pensionskasse, added that it expected complexity to increase in tax and regulatory matters.

The regulatory burden would especially increase on European level, it said, referencing the review of the IORP Directive, and the recently concluded quantitative impact study overseen by the European Insurance and Occupational Pensions Authority.

The fund added that the political and economic uncertainty would continue to impact its investments, and that bond yields that were being kept artificially low would have an impact in the coming years.

Fellow board member Rainer Jakubowski said the low-yield environment was particularly crucial in light of proposed changes to the IORP Directive.

"It is for this reason that increasing the burden for the much-needed bAV sector by introducing too high solvency capital requirements or financial transaction taxes should be urgently avoided," he said.

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