German Dental Pension Funds Face Massive Losses in Risky Investments

The pension fund of the Berlin Dental Association (VZB) is currently undergoing a financial crisis that threatens the retirement savings of approximately 10,000 dentists in Berlin, Brandenburg, and Bremen. The fund reportedly lost hundreds of millions of euros, with estimates reaching as high as one billion euros, representing nearly half of its assets. This severe downturn is largely due to risky investments, including an 80% stake in Element Insurance, which went bankrupt earlier this year.

Since 2022, the VZB has already written off 110 million euros combined from investments in various startups and luxury hotels situated in Ibiza, Sardinia, and Scotland. Many of these ventures are in serious financial trouble or insolvency. Additionally, the pension fund of the Niedersächsische Zahnärztekammer (AZN) recorded a 45 million euro loss in 2023 due to risky ventures as well, notably linked to the collapse of Signa Iduna real estate, connected to Austrian businessman René Benko.

Experts attribute these investment failures partly to the European Central Bank’s prolonged low-interest rate policy, which compelled pension funds to seek higher returns through riskier assets. The VZB, whose membership is mandatory for dentists practicing in Germany, faces intense scrutiny for its asset management. Currently, the fund is considering legal action against the Berlin Senate, responsible for its oversight, accusing it of negligence in supervising the pension fund’s handling, which led to the significant losses.

This crisis highlights wide-reaching implications for Germany’s dental professionals’ pension security and raises questions about regulatory oversight and risk management practices within professional pension funds.