German companies explore pension asset pooling to expand private markets access
German companies are increasingly considering pooling defined benefit (DB) and defined contribution (DC) pension assets to improve access to private markets, although differing investment objectives could limit the potential cost savings, according to a report by IPE.
German companies are exploring the pooling of defined benefit (DB) and defined contribution (DC) pension assets as a means to gain greater access to private markets, according to a report by IPE. This trend is gaining traction among larger corporations with established DB schemes and expanding DC plans, as combined investment structures offer benefits such as larger scale, lower management fees, and improved access to private equity, infrastructure, and private debt.
Christoph Schaumlöffel, senior director of investments at WTW, noted that pooling could enhance governance and efficiency while addressing the differing cash flow profiles as DB schemes mature and DC assets grow. However, WTW cautioned that potential savings may be overstated, as DB schemes prioritize liability matching and predictable cash flows, while DC plans focus on long-term growth and gradual de-risking ahead of retirement.
Interest in this approach is particularly strong in infrastructure and private debt, with evergreen funds and European long-term investment funds (ELTIFs) also gaining traction as potential routes for DC investors to enter private markets.
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