GERMANY - The funding levels of pension schemes at Germany's top stock market-listed companies have not improved despite last year's market rally, consultancy firm Mercer has found.

The average funding level remained at 65% as liabilities, like assets, grew by 14% in 2009, according to Mercer, in its analysis of the accounts for the pension schemes of 19 companies listed in the German DAX stock market index. These companies represent 80% of the pension assets of German listed companies.

"Although companies are not back at 2007 funding levels of 71%, the losses sustained in the financial crisis are considerably lower than initially feared and will be put into perspective over the long-term," said Thomas Hagemann, chief actuary at Mercer Germany.

The increase in liabilities occurred because discount rates fell again in the wake of the financial crisis.

Linked to the level of high-quality corporate bond yields, these ratse had risen in 2008 from 5.3% to 6% but dropped again during 2009.

In contrast, asset levels rose from €124bn to €141bn through a combination of increased contributions as well as an average 9% investment return.

Mercer noted this return was achieved with a "comparatively conservative asset allocation" and a 25% equity exposure alongside 60% held in fixed income, another 5% in real estate and the rest in other investments.

Looking at other countries, the consultancy noted UK liabilities rose by 40% in 2009 because of "very high inflation expectations in the long-run" while assets only grew by 18%.

In the US, the funding level of the S&P1500 companies' pension funds also improved from 75% to 84%.

The German DAX-companies included in Mercer's analysis were: Adidas, BASF, Bayer, Beiersdorf, Deutsche Bank, Deutsche Lufthansa, Deutsche Post, Deutsche Telekom, E.on, Henkel, Infineon, K+S, MAN, Merck, Münchener Rückversicherung, RWE, Siemens, ThyssenKrupp and Volkswagen.

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