LUDWIGSHAFEN, Germany - BASF AG is trying to implement a preferred provider money manager arrangement across all of its European pension plans.
But to date, the project has not made much progress.
The move is part of an attempt begun by BASF's corporate head office last year to coordinate its pension provision in the six European countries where it has pension plans, according to Withhold Galinat, head of international benefits coordination at the company.
BASF is one of a few multinational companies, such as Hewlett-Packard Co. and IBM U.K. Ltd., trying to ensure consistency and save money by coordinating their European pension plans.
BASF officials have drawn up group rules on selection of investment managers, contracts with money managers and pooling of investment mandates.
But these rules have not yet been adopted across the group's European pension plans, said Mr. Galinat. Neither he nor Mr. Klein would say whether any of the boards have accepted the guides yet. The company did not want to impose the guidelines on trustee boards of its subsidiary companies as they had fiduciary responsibilities under local law.
"We offer the trustees services based on these rules. The local trustees have to convince us they have good reasons for going to other money managers," he said. Mr. Galinat would not provide details of the services offered.
He would not say if any money managers were providing asset management services to more than one of the group's European pension plans.
Cost-cutting measure
Late last year, Siemens AG, Munich, launched a program to coordinate its global pension plans in the hope of cutting asset management costs by 20% a year. Encouraging trustees of local pension plans to appoint common money managers was a key part of the coordination plan, according to Wolfgang Lotze, head of pensions management advisory for Siemens Financial Services. They have made progress in "coordinating arrangements" among the $2.5 billion defined benefit and $2.5 billion defined contribution plans in the United States, the e1.5 billion ($1.35 billion) U.K.-based Siemens Benefits Scheme, Bracknell, and the 1.8 billion Swiss franc ($1.1 billion) Pensionskasse der Siemensgesellschaften, Zurich. He would not say if the plans had yet hired any money managers.
BASF has defined benefit and defined contribution plans across Europe with combined assets totaling of e8.4 billion ($7.6 billion).
In Germany, the group has book reserves worth e3.5 billion and a pensionskasse, or insured vehicle, with assets of e3.8 billion at the end of last year. The U.K.-based pension plan had assets of e663 billion and was the group's largest non-domestic pension plan in Europe.
Dieter Klein, BASF head of investments, drew up the guidelines for investment management but would not comment for this article.
The BASF Pension Fund (U.K.), Cheadle, last year appointed Dresdner RCM Global Investors (U.K.) Ltd., London, to a L75 million global equity mandate. According to Pension Funds and their Advisers 2001, Legal & General Investment Management Ltd., London, and Scottish Widows Investment Partnership Ltd., Edinburgh, also managed assets for the plan.
Klaus Petry, business personnel manager for BASF PLC, would not comment on the U.K. pension plan.
BASF AG had been more successful on the coordination of its employee benefits, however, and in the past year developed Europewide systems to handle the transfer of benefits and staff within the group and pool insurance contracts, said Mr. Galinat.