Interview with Bafin director Frank Grund

Frank Grund has been head of life insurers and pension funds at Bafin since October 2015.
Picture: Marcus Kaufhold

A quarter of the pension funds are under close supervision. Some employers have promised grants. But not everyone succeeds, says Bafin director Frank Grund. The interest rate landscape worries everyone.

Mr Grund, recently the legislator integrated pension funds into the bankruptcy protection of company pensions. Do we have to worry about them more or less?

DThe situation of the pension funds remains challenging. Pension funds are particularly hard hit by the low interest rate phase. This is due to the product range, pension funds only offer lifelong pensions with sometimes high guarantee promises. The Corona crisis has exacerbated the situation, but has not fundamentally changed an already difficult situation.

How would you describe the situation?

We have 135 pension funds under our supervision, of which we supervise 36 more closely. That was 45. A lot has changed over the years, for example because employers have decided to provide support. With the 36 health insurers, we expect that in the medium to long term there may be a reduction in benefits if the providers or shareholders do not provide additional funds or if the health insurers fail to generate sufficient returns. As of today, we are not aware of any new upcoming benefit cuts. Some sponsors and shareholders have made or promised special benefits, although they are generally not obliged to do so. We welcome that. But the new legal regulation on bankruptcy protection is also a sensible measure. The legislator has included labor law claims for the so-called implementation path of pension funds in insolvency protection, but not the pension funds themselves.

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