The Pensions-Sondervermoegen (PSV) is expected to make the Germanstatute book early next year having just been included in the latest draft of the proposed third financial services law.

However one leading investment bank has carried out market research that leads it to believe that the vehicle will be 'stillborn'.

Claus Sendelbach, director of Commerzbank Investment Management in Frankfurt, said that although the project seemed worthwhile, a survey of over 200 of its customers revealed that they were unlikely to use the vehicle.

The tax disadvantages are too high," he said. "We think it will be stillborn."

Sendelbach added that the vehicles would probably prove popular, were the taxation situation to change.

Alf Gohdes, managing director of pension consultants, Wyatt Bode Grabner in Munich explained: "The killer in the legal situation to date and in the new legislation is that whatever you put into this PSV would be taxable at the time of payment."

However he added that any change in the tax system, such as the more investment-condusive taxation would require changes across the board.

"If they changed the taxation on this now all such systems would have to change," added Gohdes.

The Bundesverband Deutscher In-vestment Gesellschaften (BVI), the Federation of German Investment Banks, which first mooted the PSV, has yet to make an official response to its inclusion in the draft legislation but will do so next month, coinciding with another public hearing into the law.

The PSV can be used as a an external investment vehicle for both company pension assets and private plans. It has prescribed maximum and minimum limits for various asset classes but is not a separate pension fund in the classic sense, as the vehicle is designed to be run by an investment bank.

Rachel Fixsen"