A study of German pension funds' financial health and performance claims that a fund for painters and decorators is the best in the country

The German Institute for Financial Services (DFSI), an independent data provider, analysed all German pension funds (Pensionskassen) on the basis of their liability coverage (weighted 60%) and their performance (weighted 40%) to determine overall performance scores.

Zusatzskasse Maler und Lackierer was the only fund to earn an AAA grade in the study. The fund, with 165,872 contributing and 40,677 retired members, earned a 100% rating for its financial health and 91.92% for its performance.  

While the Zusatzskasse Maler und Lackierer was top of the table with a 96.8% rating, they were closely followed by the Bayer and Nestle Pension Funds, who earned AA+ grades.  

Dr Mario Metzler, a pension provision expert at the DFSI said: "The majority of pension funds enjoy strong financial health and offer a good return." Metzler indicated that performance was improving amongst Germany's pension funds citing that the numbers of pension funds failing the Finance Ministry's stress tests declined from twelve in 2007 to six in 2009 (2010 results are not due until June 2011).

Metzler added, however, that clear difference in financial health and performance remain, echoing fears of some pension fund members in recent years of pension deficits. These have not yet been borne out by any major difficulties though and are partially caused by relatively opaque accounting of pension provision where in addition to funds, companies keep mere reserves or pay outgoings from their current accounts to fund pension claims.

Pension funds therefore play a much smaller role in the retirement system in Germany than the UK, as they account for just 26% of occupational pension saving. Their role has increased in the past decade however, as the generous state pension system looks demographically unsustainable. 

DFSI's Top 10 German occupational pension funds by financial health and performance:

1) Zusatzkasse Maler und Lackierer
2) Bayer Pensionskasse
3) Nestle Pensionskasse
4) Pensionskasse von Frankfurter Sparkasse
5) Pensionskasse Berolina
6) Gerling Versorgungskasse
7) Zusatzkasse Baugewerbe
8) Versorgungswerk Dachdecker
9) Zusatzkasse der Dachdecker
10) Hamburger Pensionskasse von 1905

Source: http://www.dfsi-institut.de/publikationen.php

dbillingham@wilmington.co.uk

First published 24.03.2011