GERMANY – German property firm Hypo Real Estate says it has covered itself against defined benefit pension commitments by taking out an insurance policy with Allianz.

“As of January 1 2005, the Hypo Real Estate Group covered itself against the major risks attributable to the defined benefit pension commitments by taking out an insurance policy which is categorised as a ‘qualified insurance policy’ according to the IFRS,” it said.

The Munich-based firm, formerly part of HVB, added that the cover is applicable for both vested and future entitlements.

“In this way, it now offers its employees additional security for the future pensions,” the group said in its annual report. It said the move means it can treat the pension provisions without any impact on the balance sheet.

It said they can “netted with the value of he reinsurance and the risk of an increased life expectancy has been transferred to a third party”.

The company shifted its pension discount rate to five percent from 5.5% before. Its pension obligations grew to €158m at the end of 2004, from €140m the year before.

The firm said fourth-quarter pretax profit was unchanged at €66m.

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