German professional pension funds face massive losses from risky real-estate bets

Germany’s 91 occupational pension schemes, which operate on a capital-funded basis, have reported substantial deficits after years of low interest rates and aggressive real-estate investments. The Bavarian Versorgungskammer, overseeing 12 funds with roughly 120 billion euros in assets, allocated around 1.6 billion euros to U.S. property projects, now facing a potential loss of several hundred million euros. In Berlin, the dentists' fund saw its 2.2 billion-euro portfolio shrink by more than half due to investments in a failed insurance start-up, an Italian hotel, and other ventures, sparking fears of pension cuts.

A 2,000-page lawsuit targets twelve defendants, including former board members and the Berlin supervisory authority, while a criminal probe examines possible embezzlement. Other regional schemes have recorded write-downs totaling hundreds of millions of euros, but most maintain sufficient reserves to meet current pension obligations.