The German insurance association, GDV, is proposing to give employers the possibility to automatically enrol employees in company pension schemes, it said in a paper defining its position on the upcoming snap elections.
GDV is in favour of automatic enrolment for company pensions, but without the legal obligation for employees to sign for an occupational pension contract, it added.
Company pension schemes must be further strengthened to increase the take-up among employees, GDV said.
Especially small and medium-sized firms (SMEs) need “more flexibility, regardless of collective [bargaining] agreements”, the association added in the paper, referring to the possibility of opening up existing defined contribution (DC) plans agreed by representatives of employees and employers under so-called social partner models.
The former governing coalition of social democrats (SPD), Greens and liberal party (FDP) drafted a second pillar pensions reform to open up social partner models to companies not bound by collective bargaining agreements.
In 2028 the government will assess whether occupational pension take-up has made progress, not excluding the possibility of introducing an opt-out clause if company pensions struggle to expand, according to the second pillar pensions reform draft.
The Christian Democratic Union (CDU) party, tipped to win the snap elections planned next year on 23 February, is in favour of mandatory capital-funded pensions for all.
The CDU plans to cut taxes on the earnings of retirees who decide to continue working after reaching the statutory retirement age.
Friedrich Merz, the chancellor candidate for the Union, the alliance of the CDU and the Christian Social Union (CSU) in Parliament and for the elections, has ruled out increasing the retirement age, now set at 67, but workers who retire earlier must accept pension cuts, he said during an event organised by the Junge Union, CDU’s youth political organisation.
The GDV is in favour of adjusting the retirement age to increasing life expectancy, as in Scandinavia, in the first pillar pension system, it said.
GDV’s position overlaps with that of the German Council of Economics, an academic body advising on economic policies, considering “important reforms” linking retirement age with life expectancy and lowering contributions “important reforms”, according to its annual report.
Strengthening private pensions could also reduce the dependence on statutory pensions in the medium to long term, curbing the contributions increase and the amount of funds flowing from the public budget to support first pillar pensions, the Council added.
GDV believes that savers should have a free choice when signing up for private pensions, suggesting to expand third pillar subsidies for self-employed, and market products delivering higher returns.
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