State Street to Assist Volkswagen AG in Launch of Defined Contribution Pension Fund
MUNICH, Germany--July 24, 2001--State Street Bank GmbH, Munich, a wholly owned subsidiary of the Boston-based State Street Corporation , announced today that it will assist Volkswagen AG in developing and launching a company defined contribution pension fund.
Noting that companies throughout Germany are beginning to recognize the significant value of corporate pension funds for employees and shareholders, Jay Hooley, executive vice president and head of Collective Funds Services at State Street stated, "Volkswagen AG, a highly regarded innovator, is leading the increasingly rapid adoption of defined contribution pension funds by major companies in Germany. We are pleased they have chosen to partner with State Street to assist them in transferring to a pension fund model and to manage the administration of the new fund. This new partnership underscores our commitment to leveraging State Street's position as the #1 servicer of U.S. mutual funds and pension funds and to partner with leading companies, such as Volkswagen AG, in markets worldwide."
State Street's asset management arm, SSgA, has been managing Volkswagen AG's time-value fund, a model in which employees are credited for overtime with an investment in the Company's pension scheme, since 1997.
"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, pension 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 the employer is no longer committed to a fixed pension. Instead, fixed contributions are regularly transferred to an employee's individual investment account. The employee thus shares in the overall performance of the fund."
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