Contributions to German Pensionsfonds rebound, treble in 2009 - Towers Watson

GERMANY - After a major drop in contributions to Pensionsfonds in 2008, Germany's newest occupational retirement scheme is back in favour with companies -with Towers Watson predicting growth to continue.

In 2007, German companies paid €514m into multi-employer Pensionsfonds, dropping  by almost 50%, to €271m, the following year.

However, 2009 saw contributions rebound to €940m, Towers Watson in its latest German Pensionsfonds survey.

The rise was mostly due to five Pensionsfonds the consultancy said, without revealing exact details.

In total, there are 23 multi-employer Pensionsfonds in Germany, 15 of which took part in the survey.

However, multi-employer Pensionsfonds still only play a minor role in this market with around €15bn in assets in total - with 80% held in company Pensionsfonds in 2008.

The figure is likely to have risen further over 2009, as two companies created new Pensionsfonds: Deutsche Post and Nestlé.

Outsourcing pension assets to achieve better corporate ratings or to ensure their future funding remain the most important motives for choosing a Pensionsfonds, Towers Watson pointed out - and this choice could be made easier for companies if some remaining obstacles were removed.

Among them is the cap on annual contributions which, currently at €4,400 per person, is too low for some board-level executives, while transfers of contributions are still not always seen as tax-efficient.

However, Standard Life Germany has now added a Pensionsfonds to a number of other schemes it offers.

The company signed an agreement with the Generali Deutschland PENSOR Pensionsfonds, which will take on administration of Pensionsfonds members outsourced to Standard Life Germany.

The assets will be invested in the firm's Global Absolute Return Strategy fund, which Standard Life already uses for its own pension schemes.

For Hans-Werner Rölf, director corporate pensions at Standard Life Deutschland, the growth will mainly come from the changes to the German accounting standards with the new Bilanzmodernisierungsgesetz (BilMoG).

"Many companies will only realise the changes BilMoG is bringing about once they are putting together their accounts for 2010 and they see the effects in black and white," he said.