The average coverage ratio of pension funds of German DAX 40 companies rose to a record high of 81 per cent at the end of 2023, according to Mercer Germany.

This an increase of one percentage point on the funding ratio at the end of 2022, which stood at 80 per cent; in 2021 average funding ratio was 72 per cent. The latest figure is significantly higher than figures seen between the years 2008 to 2020, when it never rose above 70 per cent.

Mercer said the higher funding ratios over the past couple of years not only reflects the relationship between the price development of the plan assets and the calculated development of the pension obligations but are also due to the general trend towards out-financing.

Regarding assets, there was an increase of pension assets in the DAX 40 of €22bn, up from €245bn to €267bn. However, liabilities increased by around €23bn from €307bn to €330bn due to a fall in the discount rate.

The composition of the DAX 40 changed in 2023. In February, Linde was replaced by Commerzbank, and in March Fresenius Medical Care was replaced by Rheinmetall. However, the departure of Fresenius Medical Care has had no impact on the pension assets in the DAX 40, as the company is fully consolidated with Fresenius SE.

The three other companies each have several billion euros in pension assets. On balance, the changed composition of the DAX only increased pension assets by around €2bn.

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