German pension funds and asset managers have struggled in the past months to compile data on costs required by the financial supervisory authority BaFin as part of a wider review launched by the European Insurance and Occupational Pensions Authority (EIOPA).
EIOPA has published a response on costs reporting for institutions for occupational retirement provision (IORPs) in 2021, recommending regular reviews – at least yearly – to submit to supervisory authorities.
BaFin is carrying out a one-off investigation for now on costs of IORPs in Germany, as it is not yet clear whether the country’s occupational pension institutions face specific challenges on costs, said Nikolaus Schmidt-Narischkin, managing director and head of sales and client management DACH at WTW, at the annual conference of the occupational pension association aba this week.
IORPs have to report transactions, administration, costs borne by the sponsoring companies, and investment costs, the latter making up for the biggest chunk of the exercise, with a deadline set for 31 May. Asset managers will deliver data to BaFin through the IORPs.
Universal Investment has faced challenges on collecting reliable data because of the diversity of asset classes – securities, alternative investments and real estate among others – with segmented Spezialfonds and different investment strategies.
The asset manager has found it particularly difficult to deliver information on alternative investments with “customised structures”, with target funds to be taken over, or fund of funds invested in Europe, said Jochen Meyers, head of relationship management, iInstitutional investors, at Universal Investment.
Occupational pension institutions use vehicles investing via multi-layer structures in German Spezialfonds, holding assets in SICAV funds in Luxemburg investing in funds specialising in alternative investments, and fund of funds globally, Meyers said to highlight the complexity of the task on collecting data.
Universal Investment has analysed costs data for 30 clients, 120 funds, and assets totalling over €30bn, it said in its presentation during the aba conference.
WTW Pensionsfonds
WTW Pensionsfonds has assets under management of approximately €4.5bn, with Master KVG, a segmented Spezialfonds, as vehicle for asset management.
“If you think about investments, in our organisation, set up modularly, with many sponsors, asset manager companies, investment institutions, investment goals and capacities in asset allocation, [this] leads always to the fact the we have many strategic asset allocations,” Schmidt-Narischkin said.
This means that there are asset allocations “highly professionally” managed, with many asset classes, and those of smaller sponsors with an unsophisticated architecture for capital investments, he added to explain how difficult it is to assess costs for IORPs.
From a long list of service providers – including asset management companies, fiduciary managers and others – efforts to collect costs data can be massively complicated, he added.
Moreover, it is difficult to collect internal data, or data relevant to the competition, from pension institutions considered social institutions in Germany, whose costs are borne by the sponsors, he said.
