The number of asset managers in Germany active in company pension schemes has increased exponentially in the past year, Torsten Isecke, head of corporate and corporate pensions at Amundi Germany, told IPE.
Asset managers are closely following the transition from defined benefit (DB) to defined contribution (DC) plans in companies.
“We are increasingly seeing two types of inquiries by [our] clients. Firstly, companies that switched to DC structures years ago, and have significant volume in their plans, would like to restructure their investment solutions,” he said.
He added: “Then, there are companies that want to switch to DC pension plans. This is primarily a consulting activity [for us] regarding implementation options and structures.”
DC pension plans usually start with little or no volume and only grow over time, he continued.
Amundi, which manages approximately €120bn in Germany, has designed a life cycle model particularly for employees of small and mid-sized firms (SMEs).
Based on the model, a higher share of assets invested in equities is cut over time in favour of bonds and money market investments, according to Isecke’s presentation at the Zukunftsmarkt AltersVorsorge conference held this week in Berlin.
The plan offers guarantees for employees in the saving phase, the option of flexible retirement, giving the possibility of lump sum payouts, in installments, or lifelong pensions, according to the presentation.
The model is implemented via standard ETFs that can have a higher or less weight to ESG criteria in investment portfolios, it added.
Asset manager Flossbach von Storch has also started a direct promise (Direktzusage) option for employees in SMEs.
Allianz Global Investors is also looking at opportunities that digitisation can offer to occupational pensions in SMEs, that still tend to avoid overhauling pension plans requiring administrative and organisational efforts.
The government is also considering new ways to spread company pension schemes, especially in SMEs, opening up the social partner model beyond collective bargaining agreements.
German companies are rethinking pension plans, increasingly considering switching to DC plans to reduce long-term, pension-related risks, with employees that can target higher returns in capital markets.
Case studies: ZF Friedrichshafen and Wintershall Dea
Supplier of mobility products ZF Friedrichshafen has reorganised its pension plans focusing also on employees without company pension promises.
The redesign included, on the one hand, opening the doors to new members, and those without benefits in firms it took over and, on the other hand, giving existing employees the option to move on from old pension promises to the new system.
The firm has created the conditions to offer a proper occupational pension to new employees, giving existing employees a “capital option”, with a more flexible and individualised pension plan, Dieter Schorr, director pension and risk management, said at the event.
With the new system the company pension administration has been digitised, with a pension app and employer portal introduced. In addition, a contractual trust arrangement (CTA) was implemented.
Overall, the reorganisation also had a positive effect on the balance sheet structure of the company, contributing to better planning of risks and costs, it said.
Producer of natural gas and crude oil Wintershall Dea has also reorganised pensions for new members through a “fund-accessory” direct promise with a guarantee on contributions paid, and disability coverage without a health check.
The company decided to introduce the new plan to transition from the Pensionskasse, and 99% of the employees, particularly younger ones, have opted for it, said Anja Seitz, HR senior specialist pensions at Wintershall.
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