The coverage ratio of German companies’ pension schemes in the DAX 40 has continued its record-breaking rise, according to updated projections from Mercer.

It found that, on the basis of the annual reports of the DAX 40 companies published up to 16 March, the funding ratio of those companies’ pension schemes has risen to a new high of over 80 per cent.

Almost all asset classes suffered price losses in 2022, which had an impact on the pension assets in the DAX 40.

The value of assets held by pension schemes fell by €51bn over the year, from €299bn to approximately €248bn.

However, the fall in assets was more than offset by a significant reduction in liabilities.

Liabilities decreased by €103bn during 2022, from €412bn to around €309bn.

Mercer attributed this reduction to an “enormous increase” in the actuarial interest rate over the year.

"For investors in 2022, it was particularly important to make the portfolio less risky and to keep losses to a minimum,” commented Mercer Germany head of investment consulting, Jeffrey Dissmann.

“Due to the highly interest-sensitive obligations, pension investors were able to noticeably increase their coverage, despite the falling assets.”

Mercer Germany chief actuary, Thomas Hagemann, added: “Due mainly to the war in the Ukraine, the interest rate level was volatile in 2022, but generally went up.

“At the end of the year, we reached the highest end-of-month figure in over 10 years.”

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