Aleading German pensions adviser, Richard Herrmann of consulting firm Heubeck, sees a strong future for German Pensionsfonds.
The funds - Germany’s answer to the equity-oriented Anglo-Saxon pension fund - should double their assets every two years now that the government has boosted their competitiveness, he says.
In implementing the EU pension fund directive last July, the government adjusted the Rechnungszins - a figure used to calculate how pension obligations can be met - for Pensionsfonds.
As a result, considerable liquidity is no longer required when companies remove their pension obligations from their balance sheet and transfer them to a Pensionsfonds.
On-balance sheet pension assets, known as the Direktzusage, account for almost 60% of the €367bn in total corporate pension assets. Pensionsfonds are regarded by international rating agencies as an effective way of funding pension liabilities.
“Although they have admittedly had a slow start, I think the government’s adjustment of the Rechnungszins is the breakthrough that Pensionsfonds needed,” Herrmann says.
“I wouldn’t be surprised if the vehicle doubles its asset volume every two years,” he says.
Launched at the start of 2002, Pensionsfonds were intended to be an improvement on Pensionskassen, Germany’s traditional pension fund that is barred from investing more than 35% in equities and 5% in hedge funds.
“I think Pensionsfonds have great potential among German small- and medium-size enterprises, not least because they can serve as a less costly and complex solution,” Herrmann adds.