The funding ratio of the pension plans of DAX-listed carmaker Mercedes Benz has increased by 4.9% year-on-year, from an underfunding level of 99.5% in Q4 2023 to 104.4% in Q4 2024, according to Q4 and full year figures published by the DAX company this week.
The funded status of the company’s pension plans has improved from -€102m to €951m, numbers show.
Pension obligations went down by 1.8% during the period, from €22.55bn in Q4 2023 to €21.59bn in Q4 2024. Plan assets set aside to pay pensions went up by 3% year-on-year in 2024 to €22.50bn, it added.
The figures disclosed by Mercedes Benz are in line with those of other DAX-listed companies whose funding ratios, according to Mercer, reached an all-time-high at 83% last year.
Pension assets of the DAX 40 companies stood at €267bn, below the peak of €300bn reached at the end of 2021, Mercer said. Last year’s increase in terms of discount rate led to a reduction in pension liabilities.
“We, therefore, assume that the level of funding of pension obligations of DAX companies will increase again,” Hanne Borst, head of retirement Germany/Austria at WTW, told IPE.
DAX-listed companies tend to actively manage pension obligations to promptly respond to geopolitical and economic crises.
“It is also important for companies to offer an attractive company pension plan, an important benefit in the ‘war for talents’, and because of demographic changes,” Borst said.
DAX companies are designing pension plans that could make it easier to hire employees, and with the possibility of building up assets reserved for company pensions in the form of contractual trust agreements (CTAs) or Pensionsfonds, a type of vehicle to offer occupational pensions, she added.
In Germany, Mercedes Benz has set up an individual pension account receiving a “guaranteed contribution” annually, with different investment options depending on the employee’s age, the company said in a statement.
The German carmaker guarantees the re-payment of contributions paid in the accounts, while investing a share of the assets in capital markets, it added.
For employees who joined the company before 1 March 2011, individual pension accounts also exist, and a fixed interest rate is guaranteed for contributions until retirement.
“Beyond the employer-financed company pension scheme, various salary conversion models are [also] offered. An adjustment in terms of pension promises is not planned,” it added.
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