State Street Bank in Munich, a wholly owned subsidiary of the Boston-based State Street Corporation, is to assist Volkswagen AG in developing and launching a company defined contribution pension fund.
Jay Hooley, executive vice president and head of collective funds services at State Street said: “Volkswagen AG, a highly regarded innovator, is leading the increasingly rapid adoption of defined contribution pension funds by major companies in Germany.”
State Street’s asset management arm, State Street Global Advisors, has been managing, since 1997, Volkswagen AG’s time-value fund, a model in which employees are credited for overtime with an investment in the company’s pension scheme.
“The restrictions contained in pension regulations that have accumulated over the years in Germany are no longer compatible with the flexibility and mobility that are increasingly required of employees,” said Corinna Linner, senior vice president and managing director of State Street Munich.
“Reforms to the pensions system in Germany are now enabling companies to set up additional pension funds alongside existing types, including direct covenant, support scheme, pensions scheme and direct insurance.
“The advantages of a company pension fund model based on defined contributions is the ease it provides for calculating the financing of future company pensions as contributions as the employer is no longer committed to a fixed pension.”
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