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Siemens says better returns boost scheme funding

GERMANY – Industrial group Siemens says higher than expected returns – plus supplemental contributions – has cut the underfunding of its main pension plans to around €1.1bn – from €3.1bn six months ago.

“The funding status of Siemens' principal pension plans on March 31 2005 improved significantly compared to the end of the prior fiscal year, with an underfunding of approximately €1.1bn compared to an underfunding of approximately €3.1bn at September 30, 2004,” Siemens said.

It put the improvement down to both “supplemental and regular” contributions – as well as higher than expected actual return on plan assets.

It said the assets returned €936m in the last six months – which represents a 10.1% return on an annualized basis, against an expected annualized return of 6.7%.

The Munich-based company has made multi-billion euro contributions to its pension plans in the last few years. It made payments of €1.25bn and €1.2bn in 2004 and 2003 respectively.

Merrill Lynch said in a recent research note on Siemens that it expected 2005 to be the last year of large (i.e. around €1.5bn) one-off pension contributions.

In February this year, Klaus Kirschenhofer, an executive at Siemens’ corporate treasury unit with responsibility for group-wide asset management at Siemens, left the unit after joining it almost three years earlier.

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