The majority of German small and medium-sized (SMEs) companies remain sceptical about the social partner model providing pure defined contribution (DC) plans, sticking to pension plans promising a certain amount of benefits, according to a report published by Generali Deutschland and F.A.Z. Business Media.

The social partner model is not convincing occupational pension experts in medium-sized companies in Germany, the report concluded.

SMEs tend to back pension plans promising minimum benefits resulting from the difference between contributions paid and contributions used to compensate for biometric risks – so-called Beitragszusage mit Mindestleistung (BZML) – and DC plans where employers are required to pay contributions resulting in a minimum amount of benefits, according to the report.

The majority of SMEs is in favour of guaranteed benefits that are primarily intended to support low earners, part-time workers or young professionals, it added.

Only 38% of occupational pension experts in SMEs think that opening the social partner model to companies not bound by collective bargaining agreements would significantly increase the demand for DC plans among employees in SMEs, Generali said.

Opening the social partner model was part of a wider plan to reform the second pillar that will likely land with the next government following the collapse of the traffic-light coalition of social democrats (SPD), Greens and liberal party (FDP).

The next government will face a situation where market penetration of company pension schemes in SMEs is stalling.

According to Generali’s study, the share of top managers signing up to at least one company pension plan fell from 56% to 53% year-on-year in 2024, one of the lowest shares ever recorded.

The share of employees holding middle management positions in SMEs with a company pension plan has remained stable at 45.1% this year, up from 44.7% recorded last year.

The share of employees who have signed up for at least one type of company pension plan now stands at 42.4%, up from 39.8% last year, figures in the study show.

The latest digital edition of IPE’s magazine is now available

Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

More from Luigi Serenelli

Topics