Ship funds as old-age provision are in distress

Sunday, 16.03.14, written by Bernd Lauberg

Ship funds are not suitable for old-age provision. Anyone who recommends them must adhere to it. The Landesgericht Heilbronn comes to this verdict. In general, the outlook for ship fund investors is rather bleak. Hundreds of thousands of German fund owners could lose billions of euros.

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Aktuelles Urteil zur Altersvorsorge durch Schiffsfonds
SOS for pension funds for retirement provision – total loss possible

Is a ship fund suitable for old-age provision? The Landesgericht Heilbronn has also asked this question (Az 6 O 299/13) and answered it with a no. The Volksbank Brackenheim-Güglingen has advised the court according to an investor wrong. The person concerned signed several closed-end funds in 2007 and invested € 450,000 in retirement funds in shipping funds. However, it has been bad for years for the shipping funds. You should not have recommended it for the investment goal of old-age provision. The current verdict makes the Volksbank liable for non-investment-appropriate advice. She has to pay around half a million euros in damages plus the lost interest. The bank is now considering whether it should go into revision and so far does not want to comment on any further details.

Ship funds as old-age provision: money invested long-term but inflexible

Ship funds can be more risky than, for example, open, freely tradable funds. The ship investments belong to the closed funds . Until a year ago, they were part of the so-called gray capital market, which is not subject to state scrutiny. Anyone who invests in ship funds must expect long terms of ten to 20 years. These come about as follows: With the help of funding from the fund, a ship is “leased” to shipping companies. After a few years, the ship should have retracted its value or be written off. Then it is sold with the highest possible proceeds. How long it takes for a ship to “pay off” depends not least on the management of the shipping company and the charter rates of the ship.

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When is which ship fund suitable?

In addition to the capacity utilization of the ship, the type of ship often also determines the fund’s income – be it a container ship, a tanker or a multi-purpose freighter. Before selecting a ship fund, an investor should be aware of which goods could be in demand in the future: oil, grain, components for wind turbines or something else altogether? Ideally, with ship funds a few years ago yields of up to twelve percent were possible. At that time, the global economy showed a high demand for freight. However, ship funds have fallen sharply in recent years as a result of the financial crisis of 2008 and 2009. The investment model threatens since the downfall . Ship funds are certainly not suitable for old-age provision.

Putting old-age provision at stake with the ship fund?

In view of the possible high financial losses of ship funds, the consumer should think carefully whether he even invested in it. In general, closed-end funds are heavily criticized . Above all, their suitability for private investors is strongly doubted because of lack of transparency, bad investment results and sometimes cases of fraud. The Verbraucherzentrale Bundesverband therefore calls for a ban on active distribution to private investors. There is a risk of total loss – generally for closed-end funds and, in particular, for ship funds. As a consequence, ship funds should definitely not be recommended for retirement. There are much safer investments available for retirement provision.

Anyone who has taken out ship funds for pensions can defend themselves

Anyone who has already been wrongly advised about his investment should immediately be informed by a specialist about his options . Simply canceling a contract can lead to even greater financial losses than the poor investment conditions.

As can be seen from the current court ruling, poorly informed consumers can legally defend themselves. Out-of-court settlements are often possible, explains a specialist lawyer in Handelsblatt. In principle, the bank or investment advisor must provide investor and object-oriented advice. Negative press reports must not be kept secret. Advisers must also inform you about possible reimbursements and verify how plausible a recommendation is. The fund provider itself must not be allowed to make a mistake in the sales prospectus, otherwise it could be pursued because of prospectus liability – usually within a period of three years.

Here you will find tips and further information on old-age provision.