A proposed semi-occupational pension arrangement for em-ployees by the German BAVC chemical employers association, has been nipped in the bud, after the government announced that contributions would not be taxed on an individual pension type basis.

The scheme, operating on an en-tirely voluntary basis, would have given the possibility for an employee to invest the DM936 ($563) general welfare payment made by German companies to workers, in an existing pensions style investment vehicle, which could have been saved until retirement.

A spokesperson for the BASF company, which is involved in the scheme set up, says: The basic idea was to do something for old age provision against the backdrop of decreasing state pensions. The model would have been open for employers and employees to decide if they wished to invest this money in one of the four existing German pensions systems."

However, the German government has decided the system is not a pensions arrangement, but a standard investment fund and so the employer will be liable for the tax on contributions, pushing up costs dramatically.

The spokesperson adds: "The proposals are on hold at the moment, although we hope we can change the government's mind by negotiation.""

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