German companies paid €13.1bn into pension plans last year

Large German listed companies spent €13.1bn last year to finance their pension liabilities – almost €3bn more than in 2016.

Willis Towers Watson’s analysis of DAX-listed companies found that total pension assets rose to €260bn for the first time, up from €250bn the year before.

A combination of top-up payments and a drop in the discount rate used to calculate liabilities meant the aggregate funding level reached 68%.

This was higher than preliminary calculations published by the consultancy in January suggested – and it was only topped in 2007 with 71%.

Heinke Conrads, head of retirement for Germany and Austria at Willis Towers Watson, said the payments reflected occupational pensions becoming “more and more important as a tool to attract and keep employees”.

In separate research, Mercer said several companies had made large individual top-up payments to their pension schemes in 2017, including carmaker Daimler (€3.8bn) and airline Lufthansa (€2bn).

“Despite the already high funding level further payments are expected this year,” Mercer predicted.

Mercer’s analysis also found that German pension plans generated an average return of 5.5%, similar to the return posted in 2016.

Carl-Heinrich Kehr, investment expert at Mercer Germany, said emerging market equities and real estate were the main performance drivers for this return.

Willis Towers Watson also noted that more companies than in previous years had transferred the assets for their in-house pension plans into segregated financing platforms.