Whichever asset class you look at, double-digit percentage losses were more the rule than the exception in the first half of the year.
For investors it is difficult circumstances.
And yet the financing of German company pensions by the large listed corporations should even improve this year.
This is because rising capital market interest rates have caused the discount rate, which is used to calculate the cash value of their obligations, to rise again to more than 3 percent.
Editor in business, responsible for "People and Business".
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"Over a ten-year period, the actuarial interest rates have never risen as dynamically as in the past six months," said Wolfgang Murmann from the asset management company Insight Investment when he presented the results of the third pension monitor in cooperation with the Frankfurt School of Finance and Management in a presented online conference.
"This is very good news, the present value of pension obligations is falling."
difficult situation for workers
Although the investment results are unlikely to be good, this means a relief for companies on their balance sheets.
"Depending on the duration, the obligations have fallen by 20 to 40 percent," said Murmann.
The turnaround in interest rates is thus providing relief for companies' balance sheets due to the falling current value of pension obligations.
"Strong commitment performance should offset weak asset performance."
For future retirees, however, the situation has become more difficult due to the extraordinarily high inflation.
In one example, a 25-year-old candidate, for whom 100 euros are set aside a month, receives a nominal annual pension payment of 747 euros with a 3 percent increase in contributions.
If you extrapolate the inflation rate, this only corresponds to a real pension payment of 271 euros.
"A contribution guarantee in the company pension scheme is presented as something positive," said Olaf Stotz, finance professor at the Frankfurt School.
"Superficially, it sounds positive for future retirees, but it involves costs." He made it clear that the defined contribution with a minimum benefit that is widespread in medium-sized companies is more sensitive to current capital market risks than the direct benefit commitments of employers that are widespread in corporations.
And the guarantee-free pure contribution promise (Nahles pension) could defy inflation better.
High returns with low risk
The company pension schemes of listed companies, which are often organized as separate pension funds or as a contractual trust arrangement, are well managed.
"On average, the obligations from the company pension scheme of Dax and M-Dax companies can be met without any problems," said Stotz.
He relied on a balance sheet analysis of these 90 corporations.
If you divide this into five different sections (quintiles) according to risk, a curious phenomenon that is difficult to explain becomes apparent: “A low risk is compensated with a higher return.
A portfolio with the lowest pension risks achieves a performance that is 6 percent higher each year,” said Stotz.
In the 90 Dax and M-Dax companies, the basic rule that higher returns are associated with a higher risk has been violated in old-age provision.
In view of the great importance of company pensions, something else is surprising: In a recent survey, Stotz found out that only 35 percent of employees can quantify this additional pension.
"The topic should gain much more importance," said the finance professor.
He is convinced that many employees would welcome the more promising variant of a pure defined contribution plan if it existed.
But this also requires explanation and is not accessible to everyone.Keywords: