Investments of German pension funds in Spezialfonds have steadily grown over the past few years, from 31% in 2021 to 34% in 2023, reaching a total of €716bn last year, according to figures published yesterday by the fund industry association BVI.
In terms of assets under management (AUM), pension schemes are the largest investor group in Spezilafonds, followed by insurance companies with €541bn, BVI added. Both groups together account for 60% of total AUM in Spezialfonds.
These figures once again lay bare the importance of the asset management industry for retirement provision in Germany, BVI said.
Inflows to open-ended Spezialfonds slowed down significantly last year to €33.7bn, from €62.7bn the prior year, the figures show. This is despite geopolitical crises, inflation, and the increase of interest rates, said BVI’s president Dirk Degenhardt.
Capital inflows for real estate funds plunged from €12.92bn in 2022 to €7.18bn last year, and for fund of funds to €2.92bn from €6.68bn in 2022, according to BVI.
In open-ended Spezialfonds AUM came to €2.07trn, up from €194trn in 2022, which included €160.49bn from real estate funds and €131.21bn from fund of funds, it added.
Assets managed by funds increased overall by 9% year-on-year n 2023 to €4.14trn.
“This confirms the attractiveness of the German market. More than 600 asset managers from almost 40 countries are active here, in addition to Germany, mainly from the US, the UK, France and Switzerland,” said Degenhardt.
Pension reforms and infrastrutture
BVI is also aware of the essential role played by reforms, the political debate, and regulations at national and European Union level.
The association is calling again on the German government to reform the third pillar private pension system, in line with the recommendations of the group of experts Fokusgruppe Altersvorsorge.
“The government has to act now. It would be fatal if another legislative period were to pass without reforming private old-age provision,” said BVI’s chief executive officer Thomas Richter.
Experts have recommended to cut guarantees on pension products investing assets in asset classes with higher returns, proposals that are endorsed by BVI.
the association is also pushing to change rules to boost funds’ investments in infrastructure.
The governing coalition of Social Democrats, the liberal party FDP, and the Greens decided at the last minute to postpone measures for direct fund investments in renewables until the 2024 Annual Tax Act (Jahressteuergesetz 2024).
“The coalition should now use the 2024 Annual Tax Act to adopt the necessary measures so that funds can participate more in the financing of infrastructure,” Richter said.
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