Powerful German union backs plans to boost second-pillar pensions

IG Metall, Germany’s largest trade union, has expressed support for government proposals for industry-wide pension plans, although it has placed a strengthening of the first pillar at the heart of its recently unveiled reform proposal.   

It set out its stall on reform of the country’s pension system last week, presenting its proposals in Berlin.

The German government is trying to see through reform before major parliamentary elections next year.

Industry-wide pension plans, also referred to as the social partner model, have been on its agenda for some time. 

As Germany’s largest trade union, IG Metall’s position on pension reform carries weight, according to Klaus Stiefermann, chief executive at aba, the German occupational pension association. 

“The prospects of success for the social partner model, both with respect to its becoming law and then its implementation, depend on the trade unions and employer associations,” he told IPE.

“The metal industry is an important one, so it’s important that IG Metall is behind the project.” 

The trade union for the metal industry is mainly calling for a strengthening of the first pillar, but it also lent its support to efforts to boost workplace pension provision, as a supplement to the state pension system.

The third pillar is not up to the task of ensuring adequate retirement income in old age, according to the union, which believes the drive to boost private pension coverage, via the take-up of state-subsidised pension schemes (Riester-Rente), has failed.

Setting out the trade union’s reform proposal, Jörg Hofmann, president of IG Metall, said occupational pensions should be available for all employees and that any second-pillar reform needed to include making mandatory the financial participation by employers.

He said the trade union was “in favour of and supports” the proposal from Andrea Nahles, the minister for labour and social affairs, for industry-wide pension providers.

The collective bargaining parties should have the option to create industry-specific arrangements to be treated preferentially under law, he added.

He also mentioned ways of making occupational pension provision more attractive, such as increasing the tax relief on funding requirements.