German pension provider BVV’s defined contribution (DC) pension BVV. Maxrente has achieved an average annual return of 6.6 per cent in the first year since its launch.

The provider said the return was due to the deliberately offensive investment strategy of the BVV. Maxrente Chance variant.

The investment strategy for the Chance variant follows a robust, "all-weather" approach that is deliberately focused on broadly diversified asset classes. 

The approach combines global markets and different value drivers, such as equities, bonds and complementary real and private markets strategies, to efficiently manage both opportunities and risks. 

To strengthen stability, the concept also features a collective safety buffer that is built up through additional employer contributions, helping to cushion fluctuations in current pension benefits.

BVV chairman of the board, Marco Herrmann, said: “The positive return confirms our strategic approach of consistently focusing on pure DC plans from the outset.

"In our view, a deliberately offensive, capital market-oriented investment strategy is the right way to go for this model in particular. The success of our investments to date reinforces our conviction."

In its first year, around 20 companies from all segments of the financial services industry introduced the model.

Additionally, the provider noted that a key factor in the pension scheme’s success is its opt-out mechanism.

When the model is introduced, employees are automatically enrolled in the pension scheme and remain in it unless they actively choose to opt out.

The provider said the model is proving to be a “structural game changer” as participation rates are significantly higher than in traditional opt-in models, and for employers, it has resulted in a high level of adoption combined with streamlined administrative processes.

In the update, BBV said that the parties to the collective agreement are proactively developing the framework of the social partner model, intending to strengthen the pure DC scheme and expand its suitability for companies in the financial sector.

The focus, BVV said, is on tailoring the model to different company sizes, compensation models, and HR strategies, as well as increasing its scalability within the industry.

Through this development, the social partners aim to ensure that the model not only remains legally viable but also establishes itself as a future-oriented instrument of modern remuneration and pension policy.

Herrmann stated that BVV manages the associated risks consistently and professionally with its Social Partner Advisory Board – through broad diversification, structured risk management and stabilising elements such as the collective security buffer.

He added that together with the social partners, the provider is creating “reliable” framework conditions that provide employers with planning security and open up attractive return opportunities for pension beneficiaries.

“In this way, the social partner model becomes a powerful instrument of modern personnel policy and strengthens company pension schemes in the long term,” Herrmann said.

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