Germany works on sustainable criteria for investing pension assets in fixed income securities | New
The German government is examining the possibility of applying sustainability principles to fixed-income benefits of pension and social security workers, a spokesperson for the Federal Interior Ministry told IPE.
The government is investing pension assets in a sustainable manner, taking into account the requirements of the Paris Agreement, he added.
Therefore, the German government is also evaluating the possibility of investing the assets of the country’s four pension and social security funds in fixed income securities “in an even more sustainable way,” the spokesperson added.
In a response to a parliamentary inquiry by the Greens, the government referred to the assets of four funds including the Federal Employment Agency, the Versorgungsrücklage des Bundes (used to relieve public finances of future federal pension spending), the Versorgungsfonds Bundes (a special fund created to finance part of the pension costs of civil servants, magistrates and career soldiers), and a long-term contribution stabilization fund, totaling around € 43.5 billion in the month of August.
Defining specific sustainability criteria for allocating fixed income assets is a “complex” issue requiring “intensive consideration, which is still ongoing,” the spokesperson added.
Germany is in the process of transferring the pension and social security assets of the four funds invested in equities to the sustainable Euronext VE ESG-World-select75 index and to the S&P Eurozone Bund / SV Climate Transition ESG Select index.
The government will allocate 65% of total equity investments worth around € 10.8 billion to the S&P index and 35% to the Euronext index, he added.
Pension and social security assets are invested in equities on a long-term basis and in accordance with the principles of security, liquidity and yield as set out in the Law on the Pension Reserve – Versorgungsrücklagegesetz.
The government’s sustainable development strategy is also taken into account. In its response to the Greens’ inquiry, the government said it was considering setting sustainability criteria for fixed income securities through public equity investments in general to help contain global warming.
When asked whether the pension reserve law or the climate protection law will change following the introduction of the sustainable finance strategy, the government said the changes are subject to analysis. existing rules and that the new government will make the decision.
The German government will improve investment and sustainability reporting by defining a concept focused on disclosure rules set at EU level and EU taxonomy, in line with the sustainable strategy.