The Germans sound as if they have got themselves into a mess with their pension investments. We can hardly crow (we lost up to a third of the capital in our DB plans in the autumn of 2022) but this suggests that we have got to grips with funded public sector schemes (like LGPS) in a way we don’t associate with Germany.
Florian Muller in the weekend FT tells us
German public pension funds are facing more than €2bn in losses and potential writedowns from mandatory investment.
Thanks Florian Muller in Financial Times
The rather grim picture relates to a large number of those impacted being high powered public sector workers.
A painful business
German pension funds are facing more than €2bn in losses and potential writedowns from risky property and private-market investments, sparking concerns that the sector is in a “catastrophic” state.
We learn;
German pension funds are facing more than €2bn in losses and potential writedowns from risky property and private-market investments, sparking concerns that the sector is in a “catastrophic” state.
None of our business we might say , while we wait till work starts again in September. We are Brexited , let them get their house in order. But there are echoes here of earlier in the year , here in Britain.
“These are mandatory pension contributions,” said Peter Mattil, a Munich-based lawyer who is seeking an independent investigation into BVK’s investments. “That places a particularly high duty of care on those managing the money.”
Tom McPhail and Josephine Cumbo will be reading with interest. The investments are being made by groups of lay-investors who sound rather like what we had until the corporate trustees came along.
Investment decisions are frequently taken by honorary board members who continue to work full time in their professions, supported by comparatively small executive teams.
I can see a few with vested interests cutting out the article and pinning it to the office notice board (well I live in the past). I’ll finish with this bombshell
“How can anyone think it’s a good idea to entrust investment decisions to people performing the role on an honorary basis alongside their regular jobs — without requiring independent scrutiny and expert advice? This isn’t a gardening club,”
said Holger Wassermann, a professor of controlling and accounting at FOM University of Applied Sciences who reviewed the Berlin dentists’ fund.
The mix of lay and professional trustees, the use of managers who are well supervised and a little more reporting , all seem necessary. Sometimes you feel a little happier being British after reading an investment article; not often- but sometimes!