Where do the returns come from?

Andreas Lindner explains why people need more opportunity-oriented investments and how Allianz’s new “KomfortDynamik” pension concept for the German market can help. Lindner is responsible for capital investments at Allianz Leben in Germany.

 

Germany’s pensioners-to-be will have to get used to the idea of shrinking pensions. Given the low interest rate environment, the high requirements of retirement provisioning cannot be covered by fixed income investments alone. Investments that are solely security-oriented, such as German government bonds, have just about reached the zero threshold and are barely yielding any returns. It’s the same story with traditionally secure forms of investment such as savings bonds, time deposits, overnight deposits and savings passbooks. Anyone putting money aside for retirement will have to invest up to three times more today in order to get the same returns they would have enjoyed 20 years ago.
 
But how can we avoid falling into this interest rate trap? More profitable, opportunity-oriented investment strategies are in demand right now. Above all, this includes investments in shares, corporate bonds and government bonds issued by emerging markets. But many people lack the courage to use such a strategy to manage their retirement provision. Either because they don’t have the necessary expertise in capital markets or because they simply don’t have the time. This is where professional, active asset management can come in handy. A investment expert can help you realize opportunities and minimize risk to make sure you have enough capital when you start drawing a pension.
 

Better earnings with bonds from emerging markets and stocks

 
Our new "KomfortDynamik" pension concept offers exactly this kind of opportunity-oriented strategy, which you can benefit from: some of the customer contributions for this pension insurance flow into Allianz’ coverage assets. This means we can stick to the guarantees we made to our customers. The rest of the contributions are used in opportunity-oriented, index-linked components, including shares, corporate bonds and government bonds issued by emerging markets. These are exactly the type of asset classes that are profitable. So, for example, in the past, shareholders were recompensed for the increased risk of shares with a risk premium vis-à-vis government bonds of an average of around 4 percent. In addition, we are investing heavily in bonds issued by emerging markets. Given the high growth momentum and the associated capital requirements in many of these countries, they offer attractive investment opportunities. Yields for an average basket of government bonds issued by emerging markets currently lie at around seven percent. At less than 1 percent , the interest rate paid by German government bonds, seems measly in comparison.
 

Progressive capital protection as the policy matures

 
Allianz’ new concept includes a larger proportion of value stocks, such as shares, which for example, make up to 30 percent of a 30-year policy with ongoing premiums. Allianz' investment experts can react quickly to changes on the capital market and switch asset classes depending on the market situation. Customers know that their retirement funds are being managed by Allianz' experts. Customers benefit from Allianz' investment expertise so that they don't need to make their own investment decisions over periods of years or decades.
 
A comprehensive security package ensures that the contributions paid in will be retained and will pay a minimum pension, helping customers plan for their retirements as soon as the policy is issued. In addition, high revenues are secured for the duration of the policy, without restricting the assets' momentum, and protects the capital earned, step by step. Just like customers would handle their own retirement provision, as security-oriented investors. And most importantly, Allianz' experts manage capital investments across lines of business. This means they can keep an eye on both coverage assets and opportunity-focused, index-linked components at all times.
Andreas Lindner is responsible for capital investments at Allianz Leben in Germany
Andreas Lindner is responsible for capital investments at Allianz Leben in Germany

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Petra Brandes
Allianz Group
Phone +49.89.3800-18797
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