The pension fund for dentists in Berlin, Bremen and the state of Brandenburg – Versorgungswerk der Zahnärztekammer Berlin (VZB) – had to write off assets worth around €64.93m in 2023, according to the scheme’s latest financial statement.
The write-off in 2023 is higher than the €45.98m recorded in 2022, and results mostly from private equity investments, and investments in “affiliated companies”, and loans, VZB added in the statement.
As a result, the pension fund achieved a return of only 0.6% on assets invested during the year, against a 3% return necessary to pay dentists’ pensions, according to weekly business magazine WirtschaftsWoche.
Pension funds for professionals (Versorgungswerke) have shifted strategies towards more risky investments in the period of low interest rates.
VZB has invested in a shrimp farm, a recycling company in Ghana, in hotel companies and in a start-up. It has also invested on a large scale in real estate, reducing investments in safe interest-bearing securities, WirtschaftsWoche said in the report.
In 2023 the scheme wrestled with the impact of geopolitical tensions, inflation, and high interest rates that had an impact on the real estate markets and investments, the pension fund said in the statement.
It cut exposures to directly held bonds in portfolio in favour of other asset classes, despite interest rates becoming attractive again, and in order to meet liquidity requirements, it added.
VZB’s management believes that the fund’s investment strategy should take a new direction, back to fixed income, it added.
“Will 2024 be better for us than 2023? That probably has to be answered with a clear no,” the scheme said, adding that the real estate market is still recovering, and private equity investments are not yet up to speed.
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