Social partner models, underpinned by collective bargaining agreements between employer and employee representatives to offer defined contribution (DC) plans, are gaining momentum in Germany.
Gewerkschaft Erziehung und Wissenschaft (GEW), an education trade union, in May decided to join existing social partner models to DC pension plans to employees in private schools and universities. Three more banks will follow in the footsteps of Deutsche Bank to use the BVV Pensionsfonds, the vehicle to offer DC schemes in the financial industry, from October.
BVV is also aiming to open its the social partner model to employers outside financial services.
While social partners try to fulfil their promise to improve occupational pension provisions, a draft law was put forward by the government to introduce auto-enrolment in companies without resorting to collective bargaining agreements, and relax rigid rules on occupational pensions and investments through pension funds.
Meanwhile, corporate pension funds are reinforcing allocations to fixed income to meet long-term return targets and mitigate downside risks in their investment portfolios. Lufthansa has amassed €9bn of pension assets on its balance sheets in fixed income as it moved to kick off a Liability-Driven Investment (LDI) strategy for defined benefit plans.
In Switzerland, pension funds fended off market volatility in the first half of the year through direct and indirect investments in Swiss real estate, and allocations to bonds denominated in Swiss francs.
Luigi Serenelli
IPE DACH Correspondent
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