Top German companies' pension liabilities topped €407bn at end of 2020

German companies listed on the DAX 30 had pension liabilities of €407bn at the end of 2020, up from €389.9bn at the end of 2019, according to Mercer.

Over the same period, pension assets as reported in IFRS financial statements increased from €258.6bn to approximately €266bn. The coverage ratio of pension schemes is around 65 per cent and has fallen only slightly compared to the previous year (66 per cent).

Mercer said DAX 30 company pension schemes have performed significantly better than expected. The analysis by Mercer is based on the annual reports of the DAX 30 companies.

Mercer said that some of the changes are due to the change in the composition of the DAX 30. For example, in 2020 Lufthansa and Wirecard left whilst Deutsche Wohnen and Delivery Hero were re-introduced.

"Due to the extreme interest rate fluctuations at the beginning of the coronavirus pandemic, the interest rate level at the end of the year was uncertain. In fact, interest rates fell again by 0.15 percentage points in the last quarter. In total, the DAX companies reduced the accounting interest rate by about 0.4 percentage points in the year 2020," Mercer Germany chief actuary, Thomas Hagemann said.

In addition, Mercer said there was a large divergence in corporate investment results. Mercer Germany head of investment consulting, Jeffrey Dissman said that the financial markets were “very turbulent” with almost all asset classes experiencing mixed developments that were sometimes positive and other times negative.

"As a result, the exact point in time of decisions and reallocations in the capital investment had a large positive or negative influence on the total return,” he explained.

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