Pension fund special assets

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Retirement provision special funds (AS funds) are a form of investment fund that has been approved in Germany since April 1998 and has been prohibited since July 2013 and is created specifically for retirement provision .

General

The old-age provision special funds were created by the BVI , conceived as an alternative to endowment insurance . The legislature had not made it through to tax incentives. Differences to conventional mixed or umbrella funds with a similar investment strategy are hardly noticeable. The investor could invest in stocks, interest-bearing securities, real estate or investments. In addition to the legal requirements for investment funds, the AS funds had to comply with general conditions in order to be allowed to use the designation “old-age provision special assets”.

Legal issues

With the entry into force of the Capital Investment Code (KAGB) on July 22, 2013, the new edition of special funds for old-age provision was prohibited ( Section 347 (2) KAGB). However, this transitional provision provides that the established before the entry into force of the KAGB AS funds continue grandfathering enjoy.

Framework conditions for old AS funds

Funds were allowed to call themselves “old-age provision funds” if they complied with Sections 87–90 of the Investment Act (InvG). The law has been repealed by the KAG. It was:

  • At least 51% of the fund's assets had to be invested in stocks and shares in real estate investment funds ( Section 88 (4) InvG). The rest could be kept as cash reserve .
  • The proportion of shares and participations had to be at least 21% and a maximum of 75% (Section 88 (3) InvG).
  • The proportion of real estate could not exceed 30% (Section 88 (2) InvG).
  • A maximum of 30% of the fund's assets could be subject to currency risk (Section 88 (7) InvG).
  • Investments in derivatives ( options and futures ) were only permitted to hedge the fund assets, but not for speculative purposes (Section 88 (6) InvG).
  • Investment income was and is to be reinvested in the portfolio ( Section 87 (2) InvG) and therefore could not and cannot be distributed.
  • The investment company was obliged to offer savings plans in addition to one-off investments ( Section 90 InvG).
  • Savings plans had to be offered with a term of at least 18 years or up to the age of 60 (Section 90 InvG).
  • The investor had to save regularly, at least once a year. The contract could and can be terminated at any time with a notice period of 3 months to the end of the quarter. In the event of unemployment or disability, the period is reduced to 4 weeks to the end of the month.
  • After 75% of the agreed term has expired, the investment company is obliged to operate free fund hedging by reallocating funds into low-fluctuation funds (e.g. exchange for bond funds, money market funds; Section 90 InvG).
  • The investment company was and is obliged to offer disbursement plans for the time after the agreed term has expired if the saver, after exercising his option, decided to demand a pension payment instead of capital (Section 90 InvG).

safety

Investing in AS funds is subject to the usual fluctuations in the value of securities or real estate. High volatilities can occur here. Anyone who chooses an unfavorable time to sell fund units (for example, in the event of termination) may lose capital value. The risk is smoothed out over the course of the term. Costs are taken from the investment amount.

AS funds do not offer any guarantees with regard to a determined return. Bad fund management can make the return of an AS fund low, if it does not even fail. The security and returns of an AS fund essentially depend on the fund's investment focus. In addition, the ability and quality of the fund manager determines the success of an AS fund.

Investment focus

AS funds can be speculative or conservative. Mixed forms are possible.

Example of a speculative AS fund
  • 75% stocks
  • 25% (fixed) income securities
Example of a conservative AS fund
  • 21% stocks
  • 30% real estate
  • 49% (fixed) income securities

Tax treatment

The tax treatment corresponds to that of private endowment and pension insurance .

literature

Jürgen Baur, Falko Tappen (Ed.): Investment Laws. §§ 273 - 355 KAGB; InvStG , Volume 2. Kindle edition, De Gruyter 2015. P. 608 ff ( online ).