2019 acting for 12 pension schemes reliable over generations
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01 4 | Preface 6 | List of contents 8 | Review of the year in pictures 10 | Bayerische Versorgungskammer in figures 3
01 (from left to right) Axel Uttenreuther (Executive Board Bayerische Ärzteversorgung, Information Processing and Mathematics), André Heimrich (Executive Board Capital Investments), Daniel Just (Executive Board Chair), Ulrich Böger (Executive Board Vice Chair), Stefan Müller (Executive Board Municipal Pensions). Dear Readers, The digital transformation is also apparent The topic of sustainability is integral to every here with us: we want to make the best pos- one of our disciplines: from the commitment sible use of the chances and challenges that we made to sustainable capital investment by digitalisation and automation offer for Bay- signing the Principles for Responsible Invest- erische Versorgungskammer or BVK, for the ment (PRI) in 2011 to responsible corporate pension institutions and for their members governance with fair use of resources and our and participants. 2019 was characterised by implementation of sustainability principles in numerous digital projects (pg. 32) which have construction projects. Our overall real estate prepared us for the demands of the future and strategy (pg. 40) pursues a clear goal: to im- ensure that we – as Germany’s largest public prove the intrinsic value of the properties in pension group – are foremost in providing in- the individual pension funds. Increasingly for novations for our members and participants. us, alternative investments in e. g. infrastruc- ture (pg. 42) are also gaining importance. In our future premises at Richard-Strauss- Straße 76, BVK is establishing the precondi- Our investments are made out of responsibili- tions for a digital world of work – the structural ty to our core business: the provision of secu- framework for our future work collaboration re, profitable and reliable retirement pensions was created by the winner of the architects’ for around 2.3 million people. competition. Sir David Chipperfield and his team of architects impressed the eminent After a difficult year in 2018, although 2019 jury with their design for developing the for- was again challenging for us as an investor mer Siemens site. In an interview (pg. 44) the on the capital markets and with the associa- star architect explains his motivations for the ted increasing volatility of investments, it was simple and classic design and the role sustai- in the end a successful year. Even in difficult nability plays in his work. times we have a solid foundation thanks to 4
Reinhard Graf retired after many successful years and passed the baton to Stefan Müller as new Executive Board Member of BVK (pg. 66). At this juncture we wish to convey our heart- 01 felt thanks to all our employees for their excel- lent performance and collaboration in 2019. Thanks are also due to the self-governing bo- dies and our supervisory organ, without whose commitment to Bayerische Versorgungskam- mer and the pension schemes we would not be able to work so successfully in the long term. So here’s to continued good and trustful collaboration next year and beyond – we look forward to it! We now wish you an informative and inspi- ring read with our Annual Report 2019. Kind regards, our far-sighted capital investment strategy Daniel Just Ulrich Böger and have been able to achieve a very respec- Executive Board Executive Board table result for our members and participants. Chair Vice Chair Besides promising financial investments, individual service is also a decisive criterion for the satisfaction of our members and parti- André Heimrich Axel Uttenreuther cipants. We are working constantly to further Executive Board Member Executive Board Member improve our customer care (pg. 50) by develo- ping or optimising portals for our participants and members, opening up new digital chan- nels and expanding our advisory services. The extent of the service mentality evident within Stefan Müller this administrative group of pension institu- Executive Board Member tions for the individual professions is made clear by John Höpfner, Member of the Council and Advisory Committee as well as the Re- gional Committee of the Bavarian Architects’ Pension Scheme or BArchV (pg. 56). In 2019 the reconstitution of BVK’s Council was also accompanied by a change of chair: long-term Chair Johannes Metzger was suc- ceeded by Dr. Lothar Wittek. There were also changes for us on the Executive board as 5
01 Contents Page Preface 4 List of contents 6 Our 2019 – an overview 8 Bayerische Versorgungskammer in figures 10 01 Overall Economic Framework Conditions Who we are 16 The financial year 2019 20 Prognosis report for 2020 22 02 Sustainability at BVK 24 Digitalisation: chances and challenges 29 Current digital projects at BVK 32 Our Asset and Financial Situation Investment in a low-interest environment: investment in tangible assets 38 The asset class real estate at BVK: an insight into our strategic approach 40 An alternative: infrastructure investments 42 03 Our new premises: interview on the design with Sir David Chipperfield 44 Our Services for our Participants and Members Service mentality: the customer is key 50 John Höpfner in conversation: protecting interests in the association 55 Reconstitution of BVK Council 57 04 Nothing is as certain as change: change in the committees 59 Independent supervisory body: responsible actuary 60 Information for everyone: the new BVK group and career pages 61 Data protection is paramount at BVK 63 6
01 Page Our Employees Executive Board changes at BVK 66 From theory to practice: the new BVK employer brand 68 Welcome week for new employees 69 A training culture in transition Workplace health management at BVK 70 72 05 An Overview of the Pension Schemes Pension Scheme for Bavarian Physicians, Dentists and Veterinarians (BÄV) 76 Bavarian Pharmacists’ Pension Scheme (BApV) 77 Bavarian Architects’ Pension Scheme (BArchV) Bavarian Pension Scheme for Construction Engineers 78 06 with Psychotherapists’ Pension Scheme (BIngPPV) 79 Bavarian Lawyers’ and Tax Accountants’ Pension Scheme (BRAStV) 80 Bavarian Pension Scheme for Civil Servants (BayVV) 81 Pension Scheme for the Bavarian Parliament (VdBL) 82 Supplementary Pension Scheme for Bavarian Local Authority and Church Officials (ZKdbG) 83 Pension Fund for German Theatres (VddB) 84 Pension Scheme for German Orchestras (VddKO) 85 Pension Scheme for Journeymen Chimney Sweeps with Pension Scheme for the Chimney Sweep Trade (VKg with PKS) 86 Pension Scheme of Certified Chimney Sweeps (VdBS) 87 Annex Reference figures of the pension schemes for 2019 90 The organisational chart of BVK 92 Legal notice 94 07 7
01 Our 2019 – an overview Here are a few highlights from the past year: 2019 FEBRUARY JANUARY MARCH APRIL JUNE MAY Acquired at the beginning of 29 March 1 April the year: mixed-use real estate Architects’ Competition for Introduction of the Welcome »Zoom« – Berlin City West Richard-Strauss-Straße 76 Week for new employees –> Page 40 decided: the winning design –> Page 69 came from David Chipperfield Architects INFO –> Page 44 event Arbeits- Compliance Intranet sicherheit Management Skype for Business IT-Basics IT-S Zusammen- Alters- arbeitsportal vorsorge Datenschutz (ZAP) 8
01 26 June 19 September 28 November BVK Council reconstituted Winning of the FAZ Award Change to the Executive Board –> Page 57 “ESG Criteria Implementation at BVK: Stefan Müller succeeds 2019” Reinhard Graf –> Page 26 –> Page 66 SEPTEMBER NOVEMBER DECEMBER OCTOBER AUGUST JULY 21 May 7 October Beginning of November The BÄV acquires the residen- Celebratory event at Nymphen- BVK’s new group and career tial project »Charlie-Mills- burg Palace to welcome the pages went online Quartier« in Hamburg new chair of BVK Council –> Page 61 –> Page 40 –> Page 57 9
01 Bayerische Versorgungskammer in figures The reference figures are preliminary values, partly rounded off (as at 31 December 2019). 12 1,352 pension schemes employees 1) 1,935,095 417,770 participants pension recipients 1) employees receiving wages, incl. janitors and trainees 10
01 13,298 584,074 homes m2 of commercial space 3,569 5,001 expenditure for insured events contributions and levies in million Euro 2) in million Euro 2) without settlement costs 11
01 REFERENCE FIGURES OF THE INDIVIDUAL PENSION FUNDS -> Page 90 + 91 81,662 1) The overall capital investment volume of BVK is made up of four sectors: capital investment volume interest-bearing securities, equities and in- in million Euro vestment fund units, overnight money and time deposits and direct real estate holdings. 20,524 57,867 interest-bearing securities equities/investment fund units in million Euro in million Euro 133 3,137 overnight money and direct real estate holdings time deposits in million Euro in million Euro 1) rounding off differences 12
We are Germany’s 01 Number 1 among pension providers In Bavaria around every fifth household is entitled to benefits from BVK – highlighting our important social role and responsibility. BVK pays particular attention to maintaining The surviving dependent pension element sustainable financial systems i. e. effective means that it even extends over several over generations, and at the same time pur- generations and accordingly it must be suing an investment policy with optimal designed to be farsighted and secure. With profit and risk characteristics. The “product” its capital investment volume BVK is among retirement and occupational incapacity the leading pension institutions not only in pension in the occupational and municipal Germany but also all over Europe. No. 1 in Germany pension schemes is often invested for several with a capital investment decades from the pay-in to the pay-out date. volume of around 85 billion Euro (market value). 1. BVK (Bayerische Versorgungskammer) Europe 84.5 billion Euro (market value) In the ranking of world’s 300 largest pension funds, BVK – as last year – achieved 6th place in Europe. * World In the ranking of world’s 300 largest pension funds, BVK 2. VBL (Versorgungsanstalt des Bundes und der Länder) – 38.5 billion Euro occupies 38th place in the 3. Deutsche Rentenversicherung Bund world. ** (German Pension Insurance Association) – 37.9 billion Euro 4. Daimler AG – 33.4 billion Euro * | ** source: Pensions & Investments / 5. BVV (Pension Fund for the Finance Industry) – Willis Towers Watson 300 analysis, 1 2 3 4 5 29.3 billion Euro year end 2018 sources as at: September 2019 source: “Top 1000 Pension Funds 2019”, Investments & Pensions Europe 2019 13
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02 Overall Economic Framework Conditions 16 | Who we are 20 | The financial year 2019 22 | Prognosis report for 2020 24 | Sustainability at BVK 29 | Digitalisation: chances and challenges 32 | Current digital projects at BVK 15
02 Who we are – service and competence centre BVK – Germany’s largest public pension group – is unique in its form, strategic approach and versatility: it is a modern financial enterprise and solid supreme public authority rolled into one. As Germany’s largest public pension group, Three years before, in 1916, the oldest pen- Bayerische Versorgungskammer is the service sion institution was founded that still exists and competence centre for retirement pen- today under the umbrella of Bayerische Ver- sion provision for the occupational, municipal sorgungskammer, the Bayerische Versor- and church sectors. BVK jointly manages the gungsverband (BayVV – Bavarian Pension business of twelve occupational and muni- Scheme for Civil Servants). In 1923 came the cipal pension institutions. Our partners rely Bayerische Ärzteversorgung (BÄV – Bava- on a high level of specialisation and detailed rian Pension Scheme for Doctors, Dentists expert knowledge. BVK is a modern financial and Veterinarians) as the first occupational enterprise and solid supreme public authority pension scheme, then in 1925 followed the rolled into one. Versorgungsanstalt der deutschen Bühnen (VddB - Pension Scheme for German Theatres) From “general institution for the whole and the Bayerische Apothekenversorgung monarchy” to “silent giant” (BApV - Bavarian Pension Scheme for Pharma- King Maximilian I. Joseph of BVK has over a hundred years’ experience cists) and in 1938 the Versorgungsanstalt der Bavaria managing the broadest range of retirement deutschen Kultororchester (VddKO – Pension had a really brilliant idea in pension institutions. Our roots stretch right Scheme for German Orchestras). 1811: an insurance “for the back to 1811 when, at the behest of King Max protection and well-being of Joseph, the fire insurance companies in Bava- Over the next decades other pension institu- the Bavarian people”. ria were amalgamated into a “general insti- tions followed. Since 1995 the private indus- tution for the whole monarchy”. In 1875 the try and public service branches of the former “special public authority” was established as Bayerische Versicherungskammer have gone the fire insurance institution of King Ludwig their separate ways. The “splitting of the II. After the monarchy ended in Bavaria it was chambers” in the course of privatisation led renamed Bayerische Versicherungskammer in to creation of the Versicherungskammer Bay- 1919. ern out of the private industry portion of the business, and from the public sector portion 16
02 was created the Bayerische Versicherungs- kammer-Versorgung, known for short as Bay- erische Versorgungskammer or BVK. Our social commitment: designing the future Retirement provision is a decades-long task and requires an experienced service provider who understands the needs of participants and members in the future. BVK not only has the necessary solidity, but is also already today jointly designing the future of partici- pants and pension recipients. Versatility Pension provision is not all the same. And thus with BVK there are a number of very different professional groups among the participants with equally different pension requirements. Pension provision for the professional, • For employees of in the service of munici- Bird’s eye view of the business premises of Bayerische Versorgungskammer at municipal and church sectors palities and the church BVK’s supplemen- Arabellastraße 31 and 33 in the Munich • With its professional pension schemes BVK tary benefit fund provides a supplementary district of Bogenhausen. offers a wide range of retirement, occupa- occupational pension and state-sponsored tional incapacity and surviving dependent supplementary retirement benefits in addi- pensions for the liberal professions in in- tion to the state pension in the form of de- dependent pension institutions. These are ferred compensation or the Riester subsidy. “full provision systems” for doctors, phar- • And pensions are also provided for elected macists, architects, construction engineers, representatives who retired from the Bava- psychotherapists, defence and patent rian State Parliament up to 1978. lawyers and tax accountants. • Supplementary benefits to the state pen- Pension experts in Bavaria and throughout sion are provided for stage actors, orchest- Germany ral musicians and chimney sweeps. As a Bavarian institution BVK and its pension • In the municipal sector the retirement schemes are primarily responsible for mem- pensions of civil servants are ensured. bers of the professions in Bavaria. 17
02 REFERENCE FIGURES Members of the professions from some other Around 82 billion Euro in total capital invest- OF BVK IN SUMMARY Federal States have affiliated to the pension ments (book value), 5 billion Euro in contri- –> Page 10 schemes in Bavaria by way of state treaties butions, 3.6 billion Euro in benefits paid out REFERENCE FIGURES OF THE so that its scope extends to the states of per annum and over 1.9 million active partici- INDIVIDUAL PENSION FUNDS Rhineland-Palatinate, Saarland, Lower Saxo- pants: these are figures which prove that the –> Page 90 + 91 ny, Hesse, Thuringia, Baden-Wuerttemberg, 1,352 employees at the heart of BVK obvious- Saxony, Berlin, Hamburg and North Rhine ly understand their business well. A business Westphalia. BVK is even responsible for na- that depends on solidarity and commitment tionwide pension provision for stage actors, above all to enable trust to develop. orchestral musicians and chimney sweeps. What is important to us is secure and sustai- Financially powerful and trustworthy nable investment with broad diversification Behind the supreme public authority of BVK and a mix of investment forms. We are happy is a modern and dynamic enterprise. Our core to leave to others the pursuit of a quick profit tasks include not only looking after our par- and hectic, aggressive behaviour on the mar- ticipants and pension recipients, but also the ket. So in the course of its capital investments, secure and high-yield investment of our pen- BVK invests not only in pure financial securi- sion fund assets. Our action has always been ties, but also uses its professional construc- characterised by sustainable financial plan- tion and real estate management to invest in ning, long-term thinking and reliability. properties all over the world. Employees of Bayerische Versorgungskammer. 18
02 In terms of sites, locations, architectural styles and area, versatility is the name of the game for Bayerische Versorgungskammer. It is this strategy that makes our portfolio more resi- lient to market trends. Predictable Ensuring our participants secure and compre- hensive provision is the central task of BVK. This responsibility falls not only to the Exe- cutive Board but also to what is known as a “Responsible Actuary” (insurance mathemati- cian). To fulfil this task BVK has a comprehensi- ve early risk detection system which identifies grant of discharge to the executive. This me- Twelve pension plans under one roof – including the Pension Scheme for German risks at an early stage and restricts them. This ans that pension provision is tailored to the Theatres (VddB) which was founded in early detection system means that there is needs of the individual professional groups. 1925. enough time for a punctual and appropriate reaction to changes. Controlling and internal For executive matters of concern to all the reviews round off our comprehensive internal pension institutions, there is a central Council. security measures. These are supplemented This body is made up of representatives from by a state obligation for legal and insurance all pension institutions together and it is in- supervision and an independent auditor. volved in important joint decisions. Partnership The self-government of all the pension sche- mes is an expression of the close partnership between professional associations and Baye- rische Versorgungskammer. Whilst BVK assumes the tasks of executive di- rector, there is also an Advisory Board (or Regi- onal Committee, meeting of representatives) for each pension scheme, made up of hono- rary members from the body of members and participants, which acts as a legislative and supervisory organ. Among other things the Advisory Board decides on the pension poli- cy guidelines, the corporate charter and the 19
02 The financial year 2019 – development of the financial markets The current situation on the financial markets and the market expectations (pg. 22–23) form the framework conditions for BVK’s capital investment. In 2019 BVK was able to build on its solid financial results from previous years. Business development threatened to sour between the USA and The pension schemes showed a rise in con- China, both sides tried to smooth things over. tributions of around 5.0 billion Euro and net The US President and China’s Special Envoy Liu returns on capital investment of around 2.8 He agreed on “Phase 1” of a ceasefire. Whether billion Euro. Thus the result of net yields again this will ultimately turn out be just one step proved stable, which was also reflected in net or lead to an actual agreement with decisive Contributions in billion Euro 5.0 income – for BVK this value was 3.52 percent reductions of the demands for customs duties in 2019. Pension outlay (without settlement is not yet clear. And so the effect of the trade expenses) increased by around 200 million conflict on the economy remains dependent Euro to approx. 3.6 billion Euro. On the basis on the results, whilst US customs duties on EU of book values, the portfolio of capital invest- goods are also still not completely ruled out. ments increased by around 5 billion Euro to However, the resulting volatility is by no means 81.7 billion Euro. as great as it was at the beginning of the trade Payments in billion Euro 3.6 dispute. Situation report: development of financial and political framework conditions In Europe a decisive step was able to be taken 2019 was also affected by the ups and downs in the ongoing issue of Brexit after the House in the trade war between the USA and China. of Commons passed the Brexit law with a In view of the impeachment trial in progress withdrawal date of 31 January 2020. The reso- Expenditure for insured events at the time, US President Trump was keen to lution of the stalemate and “no deal scenario” (without settlement expenses) present successes. The trade deal, in which brought a sense of relief and an expectation the USA promised to remove customs duties of normalisation in trade relations with Great already imposed, bowed to the wishes of the Britain, even though complex contractual Peoples’ Republic of China. The financial mar- negotiations will still need to be resolved in kets too were waiting for an alleviation of the 2020. trade conflict. The European Central Bank (ECB) continued China was also a focus because of the violence with its monetary policy in 2019 too. As alrea- during the unrest in Hong Kong. When relations dy expected by many market participants, it 20
02 announced a further liberalisation even be- fore the US Federal Reserve. From November 2019 onwards corporate and government bonds were being bought up again. And no paradigm shift is to be expected under new President Christine Lagarde either. The ECB sees the Euro zone economy in a weak phase for the time being and thus still considers it necessary to pursue a monetary policy to comprehensively support economic activity. In the USA the Federal Reserve cut interest rates for the third time in the year in October 2019. This step did not set prices uniformly on the markets and indicates a faltering inflation rate and raises concerns about all aspects of economic activity. According to information from Federal Reserve Chair Powell, the Board first wants to see “a significant move up in inflation that’s also persistent” before it will activities on the previous year. The further re- consider increasing the base interest rate. duction of interest rates again offered no op- portunities for more extensive investment in Our investment year direct pension portfolios. The investments in The burgeoning hopes on the international master funds made in the year under review bond markets at the beginning of the year meant that the quotas of the current strategic that interest rates might rise were not reali- asset allocation planning for the individual sed in the course of the year and were dashed pension schemes were essentially achieved. finally in autumn 2019 by the measures an- In conjunction with this, investments in what nounced by European and US central banks. are known as risk assets and in real estates Ten-year government bonds reached a new were close to supervisory law limits. low in August 2019 with a negative return of -0.71 percent and remained consistently negative until the end of the year. In the year under review the reference interest rate for European funded bonds with an AAA rating and a ten-year term was between -0.26 percent and 1.02 percent. In these circumstan- ces BVK made no changes to its investment 21
02 Prognosis report for 2020 For the financial markets, 2019 was another challenging year. In 2020 global political uncertainties and monetary policy will continue to dictate the equity market year. The economic trough in Germany has proba- bly already been passed since the car duties which the USA threatened to impose will pro- bably not materialise in the short term. The normalisation of German-British trade rela- tions is important for the German economy. After the drastic drop in exports in 2019, there should be more German goods crossing the channel again in 2020. The dark clouds looming for global economic activity are causing the EU Commission to be a little more doubtful about the Euro zone economy. So for 2020 a rise in gross domes- tic product of just 1.2 percent is expected (up to now: 1.4 percent). Even less growth is ex- pected in Germany; here the Commission ex- After the events surrounding Brexit, increa- pects just 1.0 percent (up to now: 1.4 percent). sing geopolitical tensions around the globe The German economy has narrowly avoided and disappointing overall economic data, a technical recession. According to the ana- 2019 actually came to a relatively pleasing lyst company Sentix, the EU economic mood end. The support of the central banks also improved in November 2019, the correspon- continues to make a significant contribution ding index (calculated from 1,082 investors, to raising morale. In the core countries returns of which 225 institutional investors) rose in on government bonds increased in the later comparison to October 2019 by 12.3 points months, particularly in Europe, whilst high- to minus 4.5 points. The reasons given were risk investments recovered and were predo- the more liberal ECB monetary policy and the minantly in the black. expectation of fiscal support in the form of higher government expenditure. 22
02 The growth figures reported in the USA are In the other markets the situation also varies: showing solid growth for the last quarter. Ul- whilst in Latin America economic recovery is timately – after the long period of prevailing somewhat at risk from political crises, in the economic pessimism – there is talk of a slight- USA and parts of Asia there are windows of ly positive surprise. Although the US economy opportunity on the real estate market due is showing only sluggish growth, it is however to the slightly lower interest rates and robust robust. And so the USA is far from recession. growth prospects. The Chinese figures on industrial production In its capital investments BVK will in the futu- and retail returns improved a little in the au- re continue its farsighted action and use the tumn. And monetary growth also increased chances and opportunities which present again. But the state of the Chinese national themselves within the defined framework in economy certainly remains problematic. The order to achieve its goals. On the basis of busi- trade conflict between the USA and China ness development up to now for the financial continues to play an important role. In March year 2020 we expect interest on capital invest- 2019 the Chinese National People’s Congress ments to be slightly lower than the level last announced a growth target for the year of 6 year. This estimate can however still go up or to 6.5 percent, reflecting the uncertain econo- down as the result of currently unforeseeable mic situation which could unfold this year. In developments on the capital markets. 2018 the same GDP prognosis was formulated as “around 6.5 percent”, which left little room for interpretation. And indeed in 2018 China’s growth was 6.6 percent and 6.4 percent in the first quarter of 2019. The global real estate markets are in diffe- rent cycles. The real estate markets in Ger- many still appear robust, demand for space remains consistently high. As yet there is no end in sight to the compressed return on in- vestment. In Europe however there are signs given falling investment volumes all over Europe, that the high prices, greater geopo- litical risks and slightly subdued economic prospects are causing real estate investors to become more conservative. 23
02 Sustainability at BVK – what we consider our duty As Germany’s number 1 pension provider we committed to sustainable capital investment when we signed the Principles for Responsible Investment (PRI) in 2011. But for us sustainability is far more than that. This requires close and trusting The Principles for Responsible Investment (PRI) collaboration with the self-go- verning bodies of our pension 1 We will incorporate ESG issues (ESG= Environmental, Social schemes. But networking with other pension plans in joint as- and Corporate Governance) into investment analysis and sociations, constant observation decision-making processes. of political and economic frame- work conditions and above all 2 We will be active owners and incorporate ESG issues into competent and motivated staff our ownership policies and are also basic requirements. But practices. above all else, the contributions We will seek appropriate paid in by our participants must be invested Sustainability for us means not least respon- 3 disclosure on ESG issues safely and profitably on the capital markets. sible corporate governance, which treats its by the entities in which we most valuable resources – namely our em- invest. Upon becoming signatories, as the first ployees – our participants and members and We will promote acceptance retirement pension provider in Germany, to our business partners fairly and far-sightedly. 4 and implementation of the the United Nations’ Principles for Responsible We consider our most important areas of ac- Principles within the invest- Investment (PRI) we also assumed a pionee- tivity to be those areas where we can achieve ment industry. ring role in capital investment. We want to be most: 5 We will work together to a responsible investor; we want to get invol- our products and services – enhance our effectiveness in ved. This is a long-term process, but we are for 2.4 million people implementing the Principles. convinced that it is the right way for us and our responsibility as the largest investor 6 We will each report on our social environment to achieve sound and on the capital markets – worldwide our activities and progress good added value in the literal sense of the responsible corporate management towards implementing word. our employees the Principles. 24
02 Our products and services The legal foundations for most of BVK pension sion scheme. This is made possible by way of a schemes state that they should be self-gover- state treaty between the State of Bavaria and ning public law institutions. Self-governance the other state. So for instance architects from means that the community of participants Lower Saxony are obligatory members of the itself decides on how their pension provision Bavarian Architects’ Pension Scheme (BArchV) should be organised. This means that the on the basis of a corresponding treaty bet- retirement provision is best tailored to the ween the state of Lower Saxony and the Free needs of the relevant community of partici- State of Bavaria. pants. The self-governing bodies are mostly constituted equally – e. g. from self-employed Active beyond the borders of Bavaria persons and employees, active professionals for our participants and members: and pension recipients or employees and em- ployers. No sales commission or outflow of funds to third parties The pension schemes at BVK act on the basis of reciprocity and are exclusively not-for-pro- fit. What participants pay in as contributions or the members in contributions and/or levies, is passed on in full to the participants – less administration and staff costs. There are no sales commissions, expensive advertising campaigns or publicity-based sponsoring in Rhineland-Palatinate, Saarland, Lower deals for brand image. Saxony, Hesse, Thuringia, Baden-Wuert- temberg, Saxony, Berlin and North Rhine Good service has given us a good reputa- Westphalia. tion – far beyond the borders of Bavaria BVK is even responsible for nationwide Having grown over time, the regional scope pension provision for stage actors, or- of responsibility of the pension schemes ex- chestral musicians and chimney sweeps. tend in some cases far beyond Bavaria and some to several Federal States. Thus a number of Federal States has refrained from establishing their own pension schemes and instead joined the existing Bavarian pen- 25
02 Our responsibility as a major investor on the capital markets – worldwide Sustainable capital investment policy is un- On the other hand the best-in-class approach 2019 – An excellent year derstood as consideration of social, ethical actually prevents diverse capital invest- portfolio institutionell and ecological aspects in investment decisi- ment and is therefore rejected by us on risk awards ons. But since these aspects are not clear in grounds. We have chosen what is known as “best sustainable themselves, a generally recognised system of the engagement approach, so influencing investor” values is needed to be able to evaluate a ca- companies through voting rights, since we are On 11 April 2019 in Berlin the pital investment policy for sustainability. Our convinced that it is only through constructive investment journal portfolio concept is therefore based on the Principles dialogue with companies that we can exert institutionell presented BVK with for Responsible Investment (PRI). maximum influence to persuade them to the award as “best sustainable investor”. A renowned jury and work sustainably. top-class entrants demonstrate With a current capital investment volume of the standing of this award for around 82 billion Euro (book value), BVK has Our task as trustees requires that we achieve participants on the capital invest- considerable ”weight” on the capital market. maximum yields and at the same time im- ment market. This must be responsibly exploited – alone plement a stable, safe, long-term, high-yield and in conjunction with other investors. That’s capital investment policy. The engagement “Institutional Assets why we as the first pension provider in Ger- approach of the “active investor” also corre- Award” in the category many became signatories to the Principles for sponds best to the principles for responsible “ESG criteria imple- mentation 2019“ Responsible Investment (PRI). investment presented on page 24. In practice this means that we promote and support the The “Institutional Assets Award” In the design of our sustainability strategy the idea of sustainable investment on all levels in the category “ESG criteria various approaches – best-in-class, exclusion available to us as an investor. implementation 2019” was pre- principle or engagement approach – are ana- sented to BVK on 19 September lysed with regard to our pension provision We seek dialogue with all our business part- 2019 by the specialist publisher task. ners and exert maximum influence in all in- of the newspaper Frankfurter vestment sectors to ensure successful and Allgemeine Zeitung. Our invest- Both the exclusion principle and the best-in- sustainable economic activity within the con- ment strategy impressed on two class approach have drawbacks for our pen- text of PRI. In all our investment decisions it is counts: both the well-coordinated sion provision task. For instance the exclusion important to us to know the entities in which processes which check the sustain- principle, no matter how strict, cannot ultima- we are investing our money. So before every ability of investors and ensure this tely provide us with a guarantee that really investment we request appropriate disclosure as far as possible, and also the only sustainable investments are made. Never- of ESG factors from the companies in which constant further development of theless there are sectors, e. g. scatter bomb we want to invest. these processes were praised by manufacturers, which we exclude as possible the ESG Committee. investments. 26
02 Responsible corporate management Practically every corporate decision has effects the subject help to sensitise employees to this on the environment and the people in and subject and provide everyone with a secure Our values outside the company. Environment here is operational framework. Compliance training • Respect / esteem the physical environment in a narrow sense is mandatory for managerial staff. • Trust as well as the social environment in which an organisation acts. For us at BVK our focus Data protection • Team spirit /collegiality is above all the legitimate implementation of As a pension provider we not only deal with • Strong decision-making our pension provision task – from its design personal, but often also particularly sensitive • Readiness to accept change in trustful cooperation with our decision-ma- data. The same applies to us as an employer. king bodies to the support of our employees Besides all basic data protection require- to ensure that their abilities can unfold their ments under the law we also ensure that full potential. we only allow external data processing (e. g. by printing service providers who send Behavioural principles our notifications and other mass printed The trust of our participants, members and matter) if it is really necessary. Then we place employees is a fundamental precondition for our business partners under the obligation to the success of our work. This trust depends on handle the relevant data with extreme care. how the staff of Bayerische Versorgungskam- mer behaves both internally and towards our external target group. With a jointly developed new mission state- ment, based on five core values and behavi- oural principles, the Executive Board, man- agerial staff and employees are committed to exhibiting lawful, reliable and customer- oriented behaviour. Compliance For us, compliance is the entirety of all mea- sures to ensure the lawful behaviour of all em- ployees of BVK with regard to all relevant legal duties and prohibitions. This has been monitored since 2019 by the unit Compliance as an additional measure to our Internal Review division. Regular talks on 27
02 Our employees Pension provision is a task performed by peo- Health management ple for people. And successful work can only Administration is deskwork. Not always, but be delivered by employees who are motiva- nearly always it is a sedentary job. The health ted and productive. That’s why we are con- of our staff is a valuable asset – for the staff stantly working on our concepts for specialist themselves but also for BVK as an employer. and management staff development. In 2019 That’s why we provide not only modern, well- around 1,352 employees were working to- equipped workplaces, but we also ensure ideal wards pension provision for our participants ergonomics at the workplace. This ranges from and members. At our Welcome Week new establishing the right sitting position at va- staff are introduced to BVK world and provi- riable height desks to various sport courses at ded with the most important information. lunchtime or in the late afternoon. At an annu- al health day we publicise the broad range of We are convinced that good training and the opportunities, offer flu jabs and medical check- achievement and further development of ups. qualifications are basic foundations for long- term professional success. For our employees Family and job – and particularly for our management staff Balancing work and private life is an impor- – we have developed a comprehensive semi- tant goal, not only for our staff but also from nar and advanced training programme. Besi- an employer viewpoint, and it is an import- des method and specialist training, the focus ant goal in personnel policy. That’s why we is above all on personal development too. support our employees with various part- time working models, tied places in numerous AUDIT BERUFUNDFAMILIE In 2019 BVK was audited by the com- The subject of trainees is not something we childcare facilities in Munich, holiday child- pany berufundfamilie Service GmbH leave to chance either. We offer courses in of- care and the services of family support com- for the fourth time. We are therefore fice management and real estate agency. We pany pme Familienservice. Meals to go from certified as a company with a family- friendly personnel policy. Many offer our trainees the option of a permanent our company restaurant, even for the whole opportunities in this respect, com- employment contract after successful qualifi- family, a parent-and-child office in the case of bined with flexible place of work and hours of work for our staff, repre- cation. For our academic juniors we offer two childcare problems and working from home sent the sustainable realisation of dual honours degree programmes in conjunc- also offer flexibility, as flexitime working with- the compatibility of work and family. tion with renowned universities. Since 2019 out core hours. Our audit berufundfamilie BVK has been offering a trainee programme certificate confirms our considerable efforts. in capital investments in order to develop and support new employees. 28
The advance of 02 digitalisation – chances and challenges Digital transformation represents a huge challenge for compa- nies in private industry, but also for the whole public sector. The areas affected most are core strategies, corporate culture, organisation, value-adding chains and processes. Digitalisation is a transformation process which is gradually sweeping across all branches and business sectors. Digitalisation in the public sector corporate culture. For employees, this change The increasing digitalisation will lead to con- process means adjustment and considerably siderable changes in the future, particularly greater flexibility, including the use of mobile in the public sector. Online services, like web- devices. based orders and documents, are becoming more and more common in administration Personnel structures and overall organisation and in a few years citizens won’t need to visit public authorities at all. Customers benefit must therefore be accurately established. The recruiting of suitable new staff, but also trai- „ These disruptive changes affect markets, products, processes, from this. They can use these online services ning and advanced training measures on all organisations and whole cor- at any time and from any place. The advan- aspects of IT and coherent management pro- porate cultures. For customers tages are better quality of service and major cesses are needed. Ultimately the final consu- and consumers digital innova- time-savings for individuals. mers of the digital processes should benefit. tions have long been part of The goal: processes are faster and simpler. At everyday life – companies and „ Challenges any time and from any place required infor- public administration are re- Especially in the case of the digital document mation can be retrieved or services used, such sponding quite differently here. registration, a well-organised procedure is as document transfer. BVK is facing precisely Daniel Just essential. Large amounts of data (big data) these challenges: our digital processes require Executive Board Chair which cannot be processed using manual or constant adaptation. For the electronic trans- standard data processing methods demand fer of our members’ and participants’ data we innovative solutions. Here technical innova- must ensure that data quality and security of tions are required which can ideally also be data transfer is guaranteed. integrated into the existing IT systems. The subject of data protection is therefore But the technological changes also have a also on our minds. Guaranteeing the confi- major influence on the world of work and dential handling of customer and staff data at 29
02 all times is very important to us. In addition, instance, to realise a modern and progressive improving our digital communication is also Internet presence with new group and career important, as is the digitalisation of our real pages. The amount of invoices we receive is estate management. The goal here is to sim- to be partly automated in the future to speed plify and accelerate communication with ten- up internal processes. And the legal depart- ants and tradesmen using digital processes. ment is also currently further developing its IT strategy; here too there are plans to introduce Chances for BVK electronic files and a further development of The topic of digitalisation has top priority at the legal knowledge management. BVK. We want to ensure that we are at the fore- front of automation and digitalisation, but Looking ahead – with a view to digital trends: without following short-lived trends. Efficien- BVK’s Innovation Lab cy is our guiding principle. Our focus is always What will the digital technologies of the fu- the benefit to our participants and members. ture be? What can we do without because it It is important to examine the chances and is only briefly fashionable and what is essen- challenges of digitalisation and use these in tial because it is a mega technology trend? the best possible way for BVK. In this process These are topics for the Innovation Lab, which we want to ensure that our employees are was established at BVK in 2019. The Innova- able to work with the most modern digital tion Lab monitors all the innovations on the tools and processes: digital working meth- market which could be relevant for us in the WHAT IS A SURFACE HUB? ods are already state of the art at BVK, like future. A surface hub is a large screen for our use of surface hubs and Skype sessions. video conferences with an integra- ted whiteboard and Microsoft Office These digital tools enable the organisation of Ultimately the latest developments in IT tech- applications. meetings and conferences regardless of geo- nology and methodology will be investigated graphy. Many staff use notebooks and tablets and tested here to drive on digitalisation at from any location and also make use of wor- BVK. king from home days So IT concepts, new developments and in- The further digitalisation of internal pro- novations will be examined which are either cesses and services for our participants and already in use at other insurance companies, members is a major preoccupation. In 2019 consulting firms and congresses, or have we were able to successfully launch nume- been presented there. The Innovation Lab rous projects relating to internal administra- also creates the scope for employees to try tion, properties and the customer portals. The out their own ideas and is intended to pro- websites of BVK and the associated pension vide methods, tools and processes for brain- schemes are constantly undergoing visual storming. and technical revision. BVK has been able, for 30
02 Change process through digitalisation The new digital working world and the digi- talisation of internal processes also means an adjustment for our staff. And here we are already laying the necessary groundwork for this. In 2024 we intend to move into our new office building. So when it comes to the future design of the workplaces and internal areas we have already taken account of our long-term goals, such as paperless office, fle- xible and mobile working and the further ex- pansion of digital customer services. This will remain one of our focuses in the future. 31
02 Current digital projects at BVK – how we are preparing for the future When it comes to use of e-government services Germany is third from last in the EU. Particularly when it comes to the digitali- sation of public administration there is enormous scope for improvement all over Germany – this is not the case at BVK. In 2019 numerous online portals were launched or fundamen- tally revised. In addition many digital projects were realised or initiated to make processes more efficient. 1. Information for everyone: 2020 will also see the launch of a mobile the new group and career pages app especially for doctors. Besides the Since November 2019 the new group and classic information function this is also in- career pages of BVK have been online: tended to have a photo/scan function. This the particular focus was on a modern and will enable the user to submit documents contemporary design and the implementa- for further internal processing via a pass- tion of mobile-optimised websites. And the word-protected registration area. new BVK career portal gives an ideal repre- sentation of BVK as an employer (see also The revised members’ portal of BVK Sup- pages 61 – 62). plementary Pension Scheme (Project “Re- Port”) went live in May 2019 and offers a 2. More service for our members and partici- number of additional services. Employers, pants: new portals and apps e. g. municipal and church organisations, The online portal of the physicians’ pen- can process transactions online, which sig- sion scheme (BÄV24) was expanded in nificantly reduces the administrative work. 2019. In particular the self-service functions This means that, for instance, an annual were developed. These now include a pen- statement can be prepared quickly and sion calculator. In addition it is possible to easily via the portal without paper or post- calculate additional payments and their age. In addition, members can check their effects on future retirement pension, to call own efficiency by quickly and easily calling up a summary of contributions paid and up analyses of participant numbers, mis- entitlements since the beginning of mem- sing annual statements or even payment bership and to adapt your own communi- summaries (see also page 50). cation data. 32
02 The members’ portal of BVK civil servants’ In addition the new members’ portal of pension scheme DAISy (employer advice the Supplementary Pension Scheme and information system) will be the new was launched at cooperation partners, secure digital platform for members from the participants’ portal of this BVK Sup- March 2020. All information can in futu- plementary Pension Scheme (VIP) was re be called up conveniently online. The technically realised, work started on de- advantage: members are able to digitally velopment of the members’ portal for the transfer change notifications with the re- theatre and orchestra pension schemes levant attachments and other information. and there are also plans for a new commit- In addition, they can view pensionable ser- tee portal: the portal must in future fulfil vice periods and much more. This will con- all security standards, i. e. communication siderably improve data quality. The upload between BVK and committee members or function offered saves posting the many between the committee members them- required documents: data and important selves must be encrypted. Additional IT documents are thus received faster and can requirements include e. g. online tools like be processed more conveniently. self-service, a meetings calendar, push no- tifications, archive functions, forms and a A digital purchasing portal has also been discussion forum. introduced: since the end of 2018 all tende- ring procedures have to be processed elec- 3. Optimisation of internal digital processes tronically all over the EU. This applies to all The introduction of modern workplace communication between client and enter- technologies, but also the optimisation prise, from the notification of offer submis- of internal processes through the appli- sion to award of the contract. BVK has now cation of IT and software technologies, implemented a solution which fulfils all re- advanced massively in 2019. Our goal: to quirements and is easy to use. The advan- establish more efficient processes and use tages, such as paperless working, flexible digital tools to facilitate faster and better and easily understandable handling, less communication and data transfer both administrative work, documentation secure internally and with interface partners. against revision and avoidance of time- consuming extra work, have long been exploited even where it is not mandatory under the purchasing regulations. And by now we are also seeing a steady increase in acceptance amongst bidders. The potential applications of the purchasing portal repre- sent an important milestone in the digitali- sation of purchasing processes. 33
02 Evaluation and initial introduc- Introduction of tion of modern workplace tech- cloud technology nologies (Surface Hub, Windows in the data centres tablets, etc) Microsoft Surface Hub, a large screen dis- In 2019 IBM Cloud Private (ICP) was intro- play system with integrated whiteboard duced in BVK computing centre. This is a and Microsoft applications, enables excel- local private cloud, which ensures high lent interaction, collaboration and spon- availability, performance and security. taneity at meetings and video conferences. Two Surface Hubs are already in use at pre- The ICP is the technical foundation for the Conversion to digitali- sent, two further systems are in testing. portal solutions currently in development sation of incoming post Preparations are currently underway for an at BVK and, through technologies such as (“early scanning”) expanded test with 100 Windows tablets to Docker and Kubernetes, enables the crea- In the individual divisions of BVK see whether these devices can satisfy the tion of “containerised” applications and use “early scanning” has already been trend towards increasing mobility. of DevOps concepts. established for several years, in BVK division “Municipal Pensions” con- version is to begin in 2020. Introduction of an IAM Initial implementation of the system (initially for user IT strategy in the personnel In “early scanning” documents are administration portals) management division digitalised immediately upon re- ceipt. Further processing is then Identity & Access Management (IAM) is In December 2018 the IT strategy was pas- also entirely electronic, thus en- the umbrella term for processes dealing sed by the Executive Board, in 2019 the re- abling more efficient processes, a with the administration and maintenance quirements were included in a preliminary higher level of automation and bet- of user accounts, including the administra- study. The tendering process for an overall ter mobility in the processing. tion of user authorisations for applications system is planned for 2020. and systems (login, identity and access ma- nagement). The work will start with the modules not yet supported by a software solution or An IAM system increases the security of all in which the software support used up to associated processes. now has proved sub-optimal. This applies to the modules personnel administration, An IAM system for the portals is about to be personnel development and the electronic introduced. The pilot is the members’ por- personnel file. tal currently in development for the thea- tre and orchestra pension schemes and the participants information portal VIP. Other portal solutions, like DAISy, the Supple- mentary Pension Scheme members’ portal and BÄV24, will follow in terms of IAM inte- gration before other core applications are coupled with the IAM system. 34
02 Real estate management: Real estate management: DMS 2.0 transition to new release SAP RE-FX A major focus in 2019 was the selection The SAP module “RE Classic” in use up and implementation of a new document to now for real estate management was management system (DMS) for real estate no longer supported by SAP and had to management based on the existing ECM be converted to the successor module strategy. The goal is to automate some of “RE-FX”. The goal was to ensure that all the incoming mail processing using optical data and functionalities were also available character recognition (OCR), to implement through “RE-FX” as well as to enable the im- the legal requirements of the General Data plementation of further optimisations. Protection Regulation (GDPR), such as au- tomatic deletion at the end of the retention The successful data migration was com- duty period, and to replace the archiving pleted in March 2019. This established the solutions in use up to now. technical basis for all upcoming projects in line with the IT strategy for real estate management. Real estate management: computer aided facility management (CAFM) E-invoices Another project in 2019 was the selection and implementation of application ex- tensions to the ERP system in the form of The goal with digital invoice processing modules/portals for customer relationship is to reduce lead times and waiting time, management (CRM), for technical equity to resolve media disruptions as soon as resource management (SRM) and for mo- invoices are received and to automate in- bile applications. This was based on SAP voice checking and approval processes in master data and real estate management a user friendly way. process logic. Here cockpits were introdu- ced step by step for the customer relations Other goals of the project are the creation staff, for damage reporting or real estate of a central invoice receipt book and tam- contract notifications. In addition cockpits per-proof archiving of invoices. The pa- have now been introduced for mobile em- perless processing of incoming invoices ployees to record and process notifications also contributes to sustainability. Due to via mobile devices, including the proces- the blanket use of the software, not only sing of tasks in the course of duties to en- will the scanning of invoices be centrali- sure public safety. This was followed by the sed, but also incoming mail for real estate linking of trade service firms via the cockpit management will be recorded early too. for service providers and the integration of tenants via a tenant cockpit. 35
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