GERMANY - Former labour minister Nobert Blüm has attacked international pension funds for their greed and defended his statement that Germany's state pension is secure.

"I don't want to see pension funds grow stronger. These are the kind of institutions that ruin our corporate culture. They have nothing on their minds but how their shares are doing. They are not interested in added value or the substance of what they invest in," Blüm said in an interview with the 24-hour news channel Phoenix.

His comments echo those two years ago by vice-chancellor, Franz Müntefering, who compared foreign private equity firms to locusts.

Blüm served as labour minister throughout the entire 16-year administration of former German chancellor Helmut Kohl. In 1998, he was quoted as saying that Germany's state pension was "secure".

But amid demographic changes and persistently high unemployment, Germany's pay-as-you-go (PAYG) has come under enormous financial pressure. As a result, the two governments succeeding Kohl's have had to slash future benefits for Germans, freeze benefits for current pensioners and promote second- and third-pillar pensions.

Asked if he still felt the state pension was secure, Blüm replied: "I stand by that statement."

"The pay-as-you-go system is superior to a capital-backed system. It's all about what you do with the money. Imagine if you took the support that the government provides for the Riester-Rente and put it in the state scheme; that would greatly ease the pressure," Blüm said.

Launched in 2002, the Riester-Rente is a tax-subsidised, third-pillar pension. Since then, around eight million of the 30 million Germans eligible for the pension have signed up for it.

Reacting to Blüm's remarks, one big German pension fund chief, which asked not to be named, said he was completely bewildered. "He can't have directed his attack at German pension funds. That wouldn't be logical because the government has done everything to foster our creation," the fund head said.

According to Bernhard Wiesner, head of corporate pensions at German component maker Robert Bosch, Blüm's comments don't really make much of a difference. "That policymakers were right in building a capital-backed retirement system to complement the state pension is undisputed. There may be those who still question this, but history has already passed judgment on them," Wiesner told IPE.

"Pension funds are, moreover, long-term oriented investors. And they have the support of employee representatives. In Europe, we should therefore focus our energy on creating pension funds that perform well and provide people with long-term retirement security," he added.

Wiesner is in charge of Bosch's German Pensionsfonds, an equity-oriented vehicle that, at last count, had accumulated €500m in assets.

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