Key Takeaways
- • German corporates are increasingly weighing the pooling of defined benefit (DB) and defined contribution (DC) pension assets to improve access to private markets, according to IPE.
- • Pooling is projected to deliver greater scale, lower management fees and improved access to private equity, infrastructure and private debt, though WTW warns the savings may be overstated.
- • WTW's Christoph Schaumlöffel argues pooling could improve governance and efficiency and offset differing cash-flow profiles as DB schemes mature and DC assets grow.
- • Adoption remains limited: Lufthansa keeps DB and DC assets separate, with only its DB portfolio holding private equity and infrastructure equity.
Summary
Larger German corporates managing established DB schemes alongside growing DC plans are increasingly considering pooling pension assets to gain better access to private markets, according to a report by IPE. The proposed combined structures would offer greater scale, lower management fees and improved access to private equity, infrastructure and private debt.
Christoph Schaumlöffel, senior director of investments at WTW, reportedly told IPE that pooling could improve governance and efficiency while offsetting the differing cash-flow profiles of the two schemes as DB plans mature and DC assets expand. Marsh has also identified asset pooling as an emerging trend in Germany, pointing to investment structures such as Spezialfonds that allow companies to combine assets for growth-oriented investments.
WTW reportedly cautioned that potential savings may be overstated. DB schemes prioritise liability matching and predictable cash flows, whereas DC plans focus on long-term growth and gradual de-risking ahead of retirement, and these differing investment objectives could limit cost benefits.
Pooling remains relatively uncommon. Lufthansa maintains separate DB and DC investments, with only its DB portfolio allocating to private equity and infrastructure equity. Bosch Pensionsfonds, by contrast, invests in private equity, infrastructure and private debt through Luxembourg-based structures.
Interest is particularly strong in infrastructure and private debt. Evergreen funds and European long-term investment funds (ELTIFs) are gaining traction as potential routes into private markets for DC investors.
Christoph Schaumlöffel, senior director of investments at WTW, reportedly told IPE that pooling could improve governance and efficiency while offsetting the differing cash-flow profiles of the two schemes as DB plans mature and DC assets expand. Marsh has also identified asset pooling as an emerging trend in Germany, pointing to investment structures such as Spezialfonds that allow companies to combine assets for growth-oriented investments.
WTW reportedly cautioned that potential savings may be overstated. DB schemes prioritise liability matching and predictable cash flows, whereas DC plans focus on long-term growth and gradual de-risking ahead of retirement, and these differing investment objectives could limit cost benefits.
Pooling remains relatively uncommon. Lufthansa maintains separate DB and DC investments, with only its DB portfolio allocating to private equity and infrastructure equity. Bosch Pensionsfonds, by contrast, invests in private equity, infrastructure and private debt through Luxembourg-based structures.
Interest is particularly strong in infrastructure and private debt. Evergreen funds and European long-term investment funds (ELTIFs) are gaining traction as potential routes into private markets for DC investors.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.