Germany’s far-right party Alternative for Germany (AfD) is backing the social partner model with its defined contribution (DC) plans without liabilities for employers as a means to expand the reach of occupational pensions in small and medium-sized firms (SMEs), while the party’s economic policies raise fears of deindustrialisation.
The so-called social partner model (Sozialpartnermodell) could represent a solution to expand the reach of occupational pensions among employees in small companies, the party said in a parliamentary inquiry.
Supporting small companies remains “a central political matter” to amplify the breadth of company pension schemes, but reforms so far have not had enough impact, and many SMEs continue to hesitate to offer company pensions, it added.
The Betriebsrentenstärkungsgesetz II, the second pillar reform drafted by the ‘traffic light’ coalition government that collapsed in November, and supported by the Social Democratic Party (SPD), the Greens and the Liberal Party (FDP), aimed at opening up the social partner model to small companies not bound by collective bargaining agreements, and allow more aggressing investment strategies for DC schemes.
In the inquiry, the AfD has also asked the current minority government backed by the Greens and the SPD to disclose the amount of pension payouts that the first retirees expect from the DC plans offered through the social partner model, and how are expected returns calculated and communicated.
Only a few social partner models have been signed so far, and only 15% of the companies in Germany back actions to further strengthen the model.
In its draft party programme, expected to be approved at the party conference on 11-12 January, the AfD promises to increase the amount of first pillar pension funds in the long term to levels seen in Austria, where the right-wing populist party Freiheitliche Partei Österreichs (FPÖ) has just received the mandate to form a government, exploring an alliance with the Austrian People’s Party ÖVP.
In Germany, the AfD also proposes incentives for employees who want to work longer, to restrict immigration to qualified workers, and fight the “illegitimate” European Central Bank policy that “destroys capital-funded pension systems and private savings assets”, and return to the Deutschen Mark.
Economists have warned of the economic consequences of AfD’s plans.
Marcel Fratzscher, president of the German Institute for Economic Research (DIW), said: “The result of the policies demanded by the AfD would be massive deindustrialisation, mass unemployment and the loss of prosperity.”
Monika Schnitzer, economist and chair of the German Council of Economic Experts, added in an interview with Handelblatt that AfD’s proposals are “the complete opposite of what Germany and what the European monetary union needs, especially in these times with enormous global and geopolitical upheavals.”
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