Mission and Goals of the ÄVWL

The primary mission of the ÄVWL is to provide pension benefits to its members and their families. This includes a guarantee of a lifelong retirement pension from the standard retirement age, along with other benefits such as disability and survivors’ pensions. In order to fulfil these obligations in a sustainable and comprehensive manner, the ÄVWL has implemented a professional investment management strategy. This strategy aims to ensure a high level of initial pensions across all financial market cycles. The benefits provided by the ÄVWL are directly dependent on contributions. Since its foundation in 1960, the number of members has grown steadily, with employed physicians being the largest group. At present, the ÄVWL supports some 47,000 members and approximately 19,500 beneficiaries, with a significant number of members making voluntary contributions in addition to their mandatory contributions.

Effective Investment Management

To ensure a stable, contribution-based pension for its members, the ÄVWL’s investment strategy is designed to generate a return at least equal to the current actuarial interest rate. Additional returns (excess yield) are used for dynamic pension increases or to build up reserves. The pension fund is obliged to comply with the relevant regulations of the Insurance Supervision Act, the Ordinance on the Investment of Restricted Assets by Insurance Companies, and the guidelines of the North Rhine-Westphalian Ministry of Finance.

Investment considerations include the risk-bearing capacity of the ÄVWL (efficient risk management), the capital structure and duration of liabilities (efficient asset & liability management), as well as maintaining and improving high quality and service levels in all areas and processes of investment management. Ensuring a forward-looking and efficient administration to keep the administrative costs of investment and insurance operations low is of paramount importance.

Due to historically low or negative returns from government and corporate bonds, as well as traditional mortgage loans, the ÄVWL has progressively developed its investment strategy through diversification and internationalisation. This shift has involved exploring new asset classes and risk profiles with higher potential returns, such as mezzanine or subordinated debt financing. There is an increasing focus on infrastructure investments and commercial lending in specialised capital market niches. These more complex investments, which require greater expertise, provide stable cash flows and a consistent income base, contributing significantly to a resilient investment portfolio. Special attention is given to investments that address overarching trends, such as those under the broad term of “energy transition,” which includes investments in alternative energy production, transmission, or distribution.

In addition to the economic objective of delivering the promised benefits on a sustainable basis, the integration of ethical, social, and environmental factors into investment decisions has long been part of the investment strategy. With the “Sustainability Strategy for Investments” approved by the Supervisory Board in 2022, the ÄVWL is committed to achieving the goals of the Paris Agreement and bases its investment decisions on the United Nations Development Goals.

The internationally renowned real estate segment plays an important role in the ÄVWL, with project developments aimed at unlocking as much value creation potential as possible. Thanks to the high level of internal expertise (with own architects, appraisers, portfolio managers) and the broad capital base of the ÄVWL, counter-cyclical investment opportunities can be exploited even in difficult market situations. The internationalisation and diversification of real estate investments, together with organisational measures, have optimised the management structures in the real estate sector. The transfer of previously directly held properties to the management of a self-managed real estate company significantly contributes to a consistent assessment and robust control of the earnings and liquidity situation, even in challenging market cycles.