The coverage ratio of German DAX 40 company pension schemes hit a record 93 per cent at the end of 2025, rising by over 10 percentage points from 82 per cent at the end of 2024, according to analysis by Mercer.

However, Mercer highlighted the wide range of funding ratios within the companies. Around a quarter of DAX 40 companies have a funding ratio of less than 50 per cent, while about a third of schemes have a funding level above 100 per cent.

In Germany, there is no minimum funding obligation, and it is at the discretion of the company.

Mercer explained that the long-term improvements in funding ratios reflect the continuing trend towards voluntary financing, which is seen as a means of de-risking and leads to a mitigation of balance sheet and liquidation risks.

"The use of a fiduciary solution is usually the first step in financing – assets are earmarked for pension obligations and relieve the balance sheets and future liquidity planning.

"If necessary, fiduciary solutions can also be combined with a pension fund to achieve real outsourcing and thus further operational relief," Mercer Germany head of pension funding consulting, Dr André Geilenkothen, said.

Regarding investment performance, Mercer’s analysis of the most recent annual reports found that pension assets in the DAX 40 increased from €261bn at the end of 2024 to €274bn at the end of 2025, rising by €12bn.

The development in the bond markets also meant a significant increase in the actuarial interest rate in 2025. As a result, the value of pension obligations in the IFRS financial statements of DAX companies fell by around €27bn from €317bn to around €291bn.

Geilenkothen said: "The increased interest rate and the associated high funding ratio open up further de-risking opportunities for companies. In particular, forms of financing such as pension funds and the use of pensioner companies can further reduce operational and balance sheet risks.

“In addition, liquidity outflows can be reduced or optimised, and the costs of statutory insolvency insurance can also be reduced with pension fund solutions.”

In terms of the change in the composition of the DAX 40, Mercer found that this has only had a minor impact on the size of pension assets. In autumn, Porsche AG (but not Porsche Automobil Holding) and Sartorius left the DAX, while GEA Group and Scout24 were newly admitted.

This led to an increase in pension assets of only half a billion euros.

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