GERMANY – Union Investment has become the latest German fund manager to offer so-called ‘overtime accounts’ – a vehicle that can be used by employees to finance early retirement.

The accounts enable employees to save, on a tax-deferred basis, the monetary equivalent of overtime hours, unused holiday, cash bonuses or a portion of salary to finance not only retirement but any time off work.

The accrued savings, invested by the asset manager, are taxed when they are withdrawn by the employee or transferred to a corporate pension plan.

Union said it had teamed up with Wiesbaden-insurer R+V to offer three types of the accounts.

Union is the asset manager for Germany’s co-operative bank sector, while R+V is its insurance arm.

R+V is offering an account which guarantees a fixed rate of interest plus any dividends.

Union, meanwhile, is offering an account with a similar return guarantee as well as an account where the employee is free to choose between equities, bonds and real estate. The latter product offers no guarantee.

The accounts are being targeted mainly at small- to midsize enterprises (SMEs) in Germany which have between 20 to 50 employees.

“We already have one several mandates and the accounts have provoked much interest,” a Union spokesman in Frankfurt said. He declined to disclose further detail.

Union is the asset manager in Germany to offer the accounts. Other players include Invesco, a first mover on the accounts, Deutsche Asset Management, Allianz Global Investors and DekaBank, the asset manager for Germany’s state-owned bank sector.

There are no concrete estimates regarding the market for overtime accounts in Germany, mostly because inflows from the employee to the asset managers are small.

However, some experts believe that the accounts could become a multi-billion euro market within a decade.

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