German pharmaceutical and agriculture company Bayer is on track to adjusting its pension schemes for employees as per its 2025 plan, according to Claudia Picker, head of local experts HR Germany.
The company plans to decouple the basic pension provided by the Rheinische Pensionskasse and the direct promise (Direktzusage) arrangement, allowing for the contributions formula to be more flexible, and favouring a smooth transition from the old to the new system, according to a presentation delivered by Picker at the WTW Pensionskassentag event that took place last week in Frankfurt.
Bayer wants to make occupational pensions financially more attractive, flexible and simple to understand for employees, expecting them to have a positive impact on the company’s balance sheet, according to the presentation.
Employees should have the opportunity to switch to the new system, while negotiations with employee representatives are ongoing, it added.
In 2004, Bayer established the Rheinische Pensionskasse, closing down the Bayer Pensionskasse to new members.
The Bayer Pensionskasse has assets under management totaling €9.45bn, with income from contributions reaching €126.7m, and expenses for pension payouts of €364.4m. It caters for over 34,000 members and 57,454 pension recipients, with pension beneficiaries from approximately 180 companies.
The Rheinische Pensionskasse is smaller, with total assets worth just over €1bn, with €84.7m of income from contributions, and pension payout expenses totalling €4.4m. It caters for 52,989 members and 4,697 pension recipients, with pension beneficiaries for approximately 145 companies.
BayerPlus, the plan opened to members, is a combination of the Pensionskasse and direct promise, or supplementary pension. The Rheinische Pensionskasse provides a basic pension matching member contributions.
The supplementary pension results from the direct promise (Direktzusage) arrangement, a mix of deferred compensation, and mandatory contribution from the employer.
Bayer employees don’t seem to be convinced about the social partner model, the pure defined contribution (DC) system that would free employers from liabilities, opening up to new investment opportunities.
Bayer, instead, is looking for new ways to design occupational pensions under the existing framework, re-examining the relationship between its Pensionskasse and its direct promises (Direktzusage).
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