Irregularities and exemption: Berlin pension fund under pressure according to media reports

For some time now, there have been media reports about irregularities and confirmed bad investments by the pension fund of the Berlin Chamber of Dentists (VZB) . A prominent example is the insurtech Element, which is now insolvent and in which the pension fund was significantly involved, according to the Element insolvency administrator.

Now there is more news: According to a media report in the “Wirtschaftswoche” (paywall), Ralf Wohltmann, director of the pension fund and in this position also a member of the supervisory board of various holdings, has since been released from his duties. An inquiry from this editorial team regarding the personnel matter and the reporting in the “Wirtschaftswoche” remained unanswered.

media reports about possible conflicts of interest

According to the media report, there are also indications of possible conflicts of interest in some of the pension fund's investments. For example, in a real estate fund that Magna Asset Management manages for the pension fund. At the time of the multi-million euro purchase of an office building in Essen, two businessmen each had a 20 percent stake in Magna Asset Management - a subsidiary of the VZB holding Magna Real Estate . The same businessmen are said to have indirectly owned a large part of the building beforehand.

The duo appears "on both the seller and buyer side," the report says. Lawyers for the Magna companies spoke to "Wirtschaftswoche" and denied that the duo had been involved in the deal on the buyer side. However, the magazine also mentions other investments, such as in Engel & Völkers Digital Invest , where irregularities occurred. In addition, there is a "risk concentration that pension funds should actually avoid."

The annual reports of the pension fund can be viewed, in which the pension fund wrote off capital investments worth almost 46 million euros for 2022. One year later, at the end of 2023, it was almost 65 million euros. In contrast, at the same time, assets managed for Berlin dentists amounted to just over 2 billion euros - and a gross interest rate of 3.6 percent. The net interest rate then remained at just 0.6 percent, which was significantly below the actuarial interest rate of 3.0 percent at the end of 2023. The pension fund had also missed the target in the previous year, reaching a rounded value of 2.0 percent.

Third year in a row with net interest below the actuarial interest rate looms

However, part of the truth is that the pension fund's capital investment in previous years was sometimes significantly above the actuarial interest rate. In the ten years between 2014 and 2023, the pension fund exceeded the actuarial interest rate six times and was below it four times. This was the case twice in a row in 2022 and 2023, and a similar picture could be in store for 2024. When asked whether 2024 could be better than 2023, the pension fund wrote in its annual report: "The answer to that would have to be a clear no."

The transaction market for real estate in 2024 will "mainly remain depressed". Although investments are made in companies with positive cash flow, the pension fund notes: "Our investments are mostly not yet at the development stage, so we have to continue to work on this together with our partners." As a more long-term investor, we often want to ask ourselves earlier whether a sale makes sense and whether someone other than us might be better for further development.