Germany-based Versorgungsanstalt des Bundes und der Länder, a €10bn pension fund for public sector employees, plans to streamline its operations to boost efficiency.
VBL said that the administrative and advisory teams for the mandatory and voluntary pensions it provides would be combined by the end of 2006.
Beyond reducing costs, the move would enable insured employees to take full advantage of government subsidies related to the Riester reforms of 2002. VBL currently has 1.9m contributing employees and 1m pensioners.
“The combination of the teams to create a tight new organisation is a crucial step in our transformation into a modern and customer-focused service provider,” said VBL president Wolf Thiel.
VBL’s portfolio management team, led by Richard Peters, is not affected by the reorganisation, as the team invests the assets generated by all of the fund’s pensions.
The fund has not disclosed exact details regarding its asset allocation. But it said that it invests most of €10bn in assets in fixed income, with smaller portions allocated to equities and real estate.
Asked about the fund’s return on assets for 2005, VBL spokesman Percy Bischoff said the figure was not yet available.
“But what I can tell you is that in the last years, our return has been higher than the average for Germany’s top 10 Pensionskassen (traditional pension funds),” Bischoff said. VBL ended 2004 with a return of 5.3%
Bischoff also said that VBL was
making progress in its switch to a
capital-funded system from pay-as-you-go, noting that by 2008 the
transition would be complete for contributing employees in east Germany. By then, the financing arrangement will apply to all new pension obligations.
Bischoff could not say when the switch would be complete in west Germany.
In 2002, VBL decided to switch to a capital-funded system following enormous demographic pressure on the fund. Prior to the move, experts estimated that the the fund had only 1.5 contributing workers for every one pensioner.