GERMANY - Union Investment says it's the first asset manager in Germany to rollout a private pension targeted at pensioners and others above the age of 55.
It added these clients pay in a minimum amount of €20,000 and in turn receive payouts until they reach the age of 85.
According to Giovanni Gay, head of Union's retail funds, the new pension is targeted at the five million clients within Germany’s cooperative bank sector.
“Given the conservatism of these clients, however, I think it's realistic to say that by 2010, we'll win over less than a million, meaing that assets will total at most €1bn,” he said.
Gay added that following a joint study with the University of Frankfurt, it was agreed that the optimal asset allocation for the pension would be 66.5% bonds and 33.5% equities.
The move came as Union disclosed net inflows of almost €3bn to its institutional funds in the first half of 2005, saying much of the growth was fuelled by strong demand for institutional shares.
As a result, Union’s institutional assets under management rose to €46bn at the end of June from €42bn at the end of December. Including advisory mandates, total institutional assets were €51.5bn on June 30.
Union said €1.3bn of the new business went to its institutional shares – mutual funds created for the needs of institutional investors.
Under International Financial Reporting Standards, German investors with more than 20% of their assets in traditional institutional funds (Spezialfonds) must report every single investment made by those funds.
To avoid costs related to such a requirement, smaller investors, including pension funds, are increasingly using institutional shares.
Union also said that of the first-half inflows, €715m came from outside of German co-operative banks, which are the asset manager’s shareholders. There, the asset manager was seeing robust growth among insurers and German companies, said Alexander Schindler, board member responsible for institutional business.
“The first-half results put us very much on schedule in achieving our goal of boosting non-cooperative bank business to 40% of AUM by 2010,” Schindler told a weekend news conference. Currently, the ratio is a bit more than 25%.