The German occupational pension association, Aba, is standing by its demands to adjust the second-pillar reform proposal as further steps of the legislative process approach, expecting that the draft bill will undergo changes before landing with the cabinet.
“We assume that this draft bill will be amended at the ministry level before it goes to the cabinet,” said Aba’s managing director Klaus Stiefermann.
Associations had until last week to send their statements on the draft bill put forward by the Federal Ministry of Labour and Social Affairs (BMAS) before it moves on to the cabinet, and discussions start in parliament. The approval of the bill is expected at the beginning of next year.
The draft bill fails to make “big steps” forward, protecting existing or vested benefits, a constitutional right, with a tight budget impacting a potential increase in the level of funding for occupational pensions for low earners, the association said in its statement sent to BMAS.
Subsidies for low earners represent the biggest block of public expenses to finance the measures drafted in the bill to reform the second-pillar pension system. Costs will come to €150m in 2025, €95m in 2026, and €130m in 2027, according to government estimates.
It is a “manageable amount”, Stiefermann added.
Aba backs increasing the amount of funding, from €288 to €360, to spread occupational pensions among low earners, but suggests increasing the level of subsidy for employers from 30% to 40% or 50%.
It demanded a discussion on Aba’s possibility to intervene to adjust existing, older promises, reviewing guarantees on occupational pension plans, and to simplify the framework to define the amount of money an employer pays for occupational pensions (Dotierungsrahmen).
Changing the framework would mean that companies could protect an increasing number of workers through direct insurance (Direktversicherung), Pensionskassen and Pensionsfonds, and through social-partner models, Aba said.
The association welcomes the plan in the draft bill to open up the social-partner model with its defined contribution (DC) option to third parties not bound by collective bargaining agreements.
“One or the other rule [on the social partner model] will still have to be adjusted in detail. But now it depends above all on those [potentially] involved as to whether the social-partner models gain momentum,” Aba’s chair Georg Thurnes said.
Aba considers the possibility of introducing an opting-out clause for deferred compensation at company level favourable, with the pre-condition, according to the draft bill, that employers pay 20% of the contribution, up from the current 15%.
“We fear that many such [deferred compensation] models will fail because of this [pre-condition]. Improvements need to be made,” Thurnes said.
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