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Siemens cuts pension underfunding to €3.1bn

GERMANY – Industrial giant Siemens says it has cut its pension underfunding to €3.1bn, alongside a more than €400m return on assets.

It said it has reduced the underfunding of its principal pension plans as of December 31 last year to some €3.1bn from €3.5bn at September 30.

It added: “The improvement includes a return on plan assets for the first three months of fiscal 2006 of €443m, or 8.9% on an annualized basis, which is above the expected annual return of 6.7%.”

The comments came in the Munich-based firm’s first-quarter earnings release. A year ago it disclosed a €1.5bn in supplemental cash pension contributions.

In December the company confirmed that its pension costs in its current business year may rise by 15% as a result of a reduction in its Rechnungszins – a figure used in calculating how pension obligations can be met.

Last August, Siemens announced that it had sacked Mercer as its German pensions and actuarial consultant and replaced it with BodeHewitt, the new venture between consulting firm Hewitt Associates and Bode Grabner Beye.

Siemens was one of the first multi-national companies to remove pension liabilities from its balance sheet and have them funded by a contractual trust arrangement (CTA). Launched in March 2000, the CTA is known as Siemens Pensions Trust.

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