GERMANY – Industrial group Siemens says the assets of its 14.9 billion-euro pension fund returned 14% on an annualised basis in 2003, though it is still underfunded by 3.2 billion euros.

The company said in the return on plan assets during the first quarter was 579 million euros, which it said represents a 14% return “on an annualized basis”. This was “well above the expected annual return of 6.7%”.

It added that the projected benefit obligation of its pension plans decreased by around 100 million euros during the first quarter – as the lower dollar “more than offset the net of pension service and interest costs less benefits paid during the quarter”.

The company also said that its main pension plans as at the end of December were underfunded by 3.2 billion euros, compared to five billion euros at the end of September. This was due to company contributions of around 1.5 billion euros.

In its most recent quarterly report, the company said that it had increased its allocation to equities from eight percent to 23%, although current investment strategy was “generally biased towards high quality government and selected corporate bonds”.

Fixed income accounted for 63% of all plan assets, real estate 10% and cash four percent.

Last month saw Peter Scherkamp, the former head of finance strategy at the Siemens pension fund, announce his return to the pensions advisory business. And in September the company launched an international pensions plan for its Luxembourg based employees. The plan would be structured as a pensions savings association, known as an Assep.