Zusatzversorgungskasse des Baugewerbes (ZVK), the largest of the two sub-funds of Germany’s SOKA-BAU, the pension funds for employees in the construction industry, with approximately €10bn in total assets, plans to further broaden its international asset allocation to diversify risks, it said in its investment policy principles for 2025.

Investments outside the euro zone and in other currencies will be “significantly strengthened” in 2025, the scheme added in the paper.

Resulting currency risks will be actively monitored, while the average duration of investments will continue to be based on the structure of ZVK’s liabilities, it stated.

The fund’s investment policy principles for 2025 were approved by its management board on 6 January, and entered into force the day after.

According to 2023 numbers, the scheme invests 16.4% in equities, 9% in private equity, infrastructure and private debt, 41.5% in fixed income, and 30.2% in real estate.

SOKA-BAU plans to increase ZVK’s equities allocation to 20% by the end of 2030, and to keep it at that level until 2035, according to the paper.

The sub-fund will boost its private equity and infrastructure investments to around 8% of total assets, each, by 2035, it added.

It also plans to invest 5% in private debt – its first investment in the asset class – while the target allocation for fixed income, including high yield, has been set for 41% by the end of 2035.

The scheme plans to reshuffle its real estate allocation through divestments and consolidation of assets in order to increase profitability. It has set a target of 18% of total assets for real estate by the end of 2035. Of this, direct and indirect property will account for around 9% each.

SOKA-BAU will restrict investments in bank deposits for liquidity management reasons, it added.

ZVK has established a risk management system to monitor all material risks. Currently it has sufficient reserves to cover all risks and ensure it meets the payments of existing pension payouts, it said.

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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