German actuaries, employes and insurers are urging the government to review the so-called ‘social-partner’ pensions model, which offers a form of defined contribution (DC) plans to German workers.
The BDA employers’ association is calling for the government to open DC-style pensions to all companies. This type of pension is currently only available after an industry-wide collective bargaining agreement.
The broadest possible access to social-partner pensions would help spread DC plans to SMEs that do not yet offer occupational pensions, the BDA added.
“[Otherwise], there is a risk that a majority of employees in Germany will no longer be able to make a DC commitment because the majority of unions have not yet agreed on a social partner model,” the organisation said in the statement commenting on a bill to reform the second pillar. Takeup of the new model has been extremely limited.
The government’s draft bill is trying to losen the strict requirement of the collective bargaining agreements necessary to take part in the social-partner pensions, but it does not go far enough, BDA added.
The German Association of Actuaries (DAV) and the Institute of Pension Actuaries (IVS) have judged the proposal of the government a “balanced compromise”.
The actuaries favour the right to transfer entitlements accrued under the social-partner model to other pension funds, and also recommend allowing the possibility to pay into a new social-partner pension without changing jobs.
This is not yet forseen under occupational pension law.
Legislation has sought to separate savings and benefits under the social-partner pension plans to prevent redistribution mechanisms between generations. A buffer, contributed by the employer, can be deployed for entitlements and benefits.
But this weakens the principle of strict separation and creates a basis to “cross-subsidise” retirees from entitlements of employees, according to the actuaries’ body.
For the insurance association (GDV), a key plank of the reform is to lay the ground to strengthen company pension plans as a whole.
The GDV says the new law should give employees the right to transfer capital out of DC-type plans under an appropriate tax regime.
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