Pension Fund Blow-Up Raises Scrutiny of €300 Billion Industry
A German pension fund's loss of half its assets is raising questions about the management and regulation of a pillar of the retirement system
In an effort to recover at least some losses, the Berlin-based fund has started legal proceedings.
Photo illustration: 731; Photo: Getty Images
Berlin dentists entrusted €2.2 billion ($2.6 billion) in retirement savings to a group of colleagues with more experience filling cavities than managing money. Now half of it is gone.
Headed by a committee of half a dozen dentists and oral surgeons, their pension fund plowed more than 70% of its assets into private loans, stakes in unlisted companies and property investments. Several struggled or went bust, from a California plastic recycler to a northern German shrimp farm and a Berlin insurance startup. In some cases, it poured good money after bad, enabling companies to pay interest on other debt, according to a court filing by the pension fund known by its German acronym VZB.