With the interest rate slack, further company retirees could face financial cuts in the coming years.

In a number of pension funds, the sponsoring companies are ready to inject more money in order to avoid cuts in company pensions for employees, said Germany's top insurance supervisor Frank Grund.

“However, the cases where there is no corresponding commitment by employers are problematic.

It can therefore not be ruled out that there will be further cuts in benefits in the next few years, but I do not expect larger cases. "

According to Grund, around 90 percent of the obligations of pension funds will be fully protected by the pension insurance association from the beginning of 2022. This takes over when a pension fund cuts its benefits and the employer cannot make up the difference, especially due to bankruptcy.

In the past, the Caritas pension fund and its sister company, the Cologne Pension Fund, had to cut benefits.

Of the around 135 pension funds, around 40 are currently under closer observation.

"Pension funds have a harder time than life insurers because they only offer lifelong guarantees and cannot switch to other products," said the executive director of the financial supervisory authority Bafin of the German press agency.

Life insurers now largely only offer products with a stripped-down guarantee in their new business.

Some insurers under intensified Bafin supervision 

The German life insurers were confirmed by reason, "in view of the challenges posed by the low interest rates, having got through the pandemic pretty well so far." .

In times of low interest rates, insurance companies are finding it increasingly difficult to generate the high interest promises of the past. “We assume that interest rates on the financial market will remain low for the foreseeable future,” said Grund. In order to secure the high commitments from the old contracts, the insurers have had to put money back since 2011. The capital buffer - called ZZR in technical jargon - will increase by around 9.5 billion euros for 2021, according to the Bafin forecast, with around 6 billion euros likely to be added this year. "In the next few years, we expect the ZZR to be expanded further, but the scope and timing of this depend on the specific interest rate trend," said Grund.

At the same time, Germany's top insurance supervisor warned that one or the other insurer would have to “make an effort” to fully meet the capital requirements of the European capital and supervisory rules (Solvency II) from 2032 without any relief.

"Theoretically, the following applies: insurers with a high probability that they will not meet the capital requirements in 2032 would have to delete the transitional measures today," explained Grund.

“We currently don't see any reason for this.

The hurdle for this is relatively high anyway. ”The company would then still have the opportunity to increase its capital.

“If that didn't work, it would lose its license and shouldn't be able to do any more new business.

The fulfillment of the claims of the insured would be guaranteed. "