The funding ratio of German DAX company pension plans reached a new high of 87.1 per cent at the end of the first half of 2025, according to analysis by WTW Germany’s German Pension Finance Watch.
This represents a 5.1 percentage point increase from the end of 2024, when the funding ratio was 82 per cent. Similarly, the funding ratio of MDAX companies rose to 79.9 per cent, up 5.4 percentage points from 74.5 per cent at the end of 2024.
According to WTW, this was primarily driven by a roughly 30-basis-point increase in the international actuarial interest rate to 3.73 per cent, along with the overall stable performance of capital markets.
"The significant rise in interest rates in the spring was largely driven by the German government's investment package totalling €900bn. The actuarial interest rate in particular benefited from this – much more than expected at the beginning of the year," WTW Germany head of retirement, Hanne Borst, said.
Analysis also revealed that the increase in yields on long-term bonds and thus the actuarial interest rate totalled more than 40 basis points in March as a result of the ‘special fund’.
The strong performance of the funds is “remarkable”, WTW senior director retirement, Dr Johannes Heiniz, said, given the turbulent first quarter of 2025, which saw US tariff announcements and heightened geopolitical tensions.
Despite this, there was “no lasting negative impact” as plan assets increased by 2 per cent to €266.2bn in the DAX and by 3.3 per cent to €45.9bn in the MDAX.
"The nervousness in the capital markets was still noticeable in April, and a setback in the funding level was quite conceivable. It is therefore all the more remarkable that the pension funds have weathered this phase well. The market now seems to have adjusted to the unpredictable US policy. Volatility has decreased noticeably,” Heiniz said.
Alongside the higher actuarial interest rate, the active and diversified management of pension portfolios played a key role in supporting stability, WTW noted. Pension obligations declined by approximately 4 per cent, to €305.5bn for DAX companies and €57.5bn for MDAX companies. Combined with positive asset performance, this reduction helped to improve the overall funding ratio.
Borst said this development is an example of how professional management can be “effective even under challenging conditions”.
"Companies that have set up their pension schemes in a strategic and diversified way not only contribute to financial stability, but also secure the company pension scheme for their employees in the long term,” she said.
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