TK Pensionsfonds, the pension scheme of the insurer Techniker Krankenkasse (TK), the largest in Germany, has cut its exposure to equities, increasing its target investments to private markets in a new strategic asset allocation (SAA), it said in its 2023 financial statement.

The corporate pension scheme has also increased its investment target to euro corporate bonds, assigning a new mandate for the asset class, while winding up its euro equity brief to kick off its new SAA, it said without naming the asset managers involved.

The scheme believes the potential returns on equity markets this year are likely to be limited because the positive 2023 valuations are no longer cheap, it explained.

At the same time, a large investment market – the bonds market – is available again as an alternative for investments, with low interest rates unlikely to rise for the time being, the scheme’s report noted.

Returns on bonds are often higher than the dividend yields on stock markets, and is not unrealistic that companies’ profit margins could come under pressure, it said.

TK Pensionsfonds’ own assets will continue to be invested in fixed income with a high credit rating and daily available bank deposits. Increasing interest rates means that bonds trade below their purchase price.

The scheme plans to continue to underwrite target funds in private markets, expecting further capital calls, the statement noted, adding that the actuarial interest rate was adjusted in line with the new asset allocation and with the higher level of interest rate, at 3.75%, from the previous 1.50%.

Assets under management for the scheme have increased to €2bn since its inception in 2019, to pay pensions for employees of Techniker Krankenkasse, the scheme’s sole shareholder, through the TK Pensionsfondsrente plan.

The total amount of assets was equal to the value of security assets held in a Master-Spezial AIF fund, and increased from €1.91bn in 2021, according to the statement. The scheme returned 8.43% in 2023, compared with -12.06% in 2022, it added.

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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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