German shipping company Hapag-Lloyd and speciality chemical company Evonik have switched to defined contribution (DC) plans for their employees.
Hapag-Lloyd has replaced “provision-based” defined benefit (DB) plans with one DC plan taking into account inflation, modern and dynamic employment relationships, Jorge Terradas, the company’s senior director labour relations and HR services, disclosed during the Handelsblatt occupational pension forum in Berlin this week.
“We wanted [to introduce] a dynamic and flexible system accompanying the employees from the start to a leading [employment] position, but also for people working onshore,” he added.
The previous pension plan was split in two, one contract for senior people and captains, and one for employees working onshore.
The company designed both plans as direct promises (Direktzusagen), paid out as a lifelong occupational pension without deferred compensations allowing employees to pay a share of their wages into the plan.
Existing occupational pension contracts for senior people and captains will remain in place, despite the DC switch, while the company is freezing entitlements from the older plan of employees working onshore and sailors, according to the presentation.
“We have [also] decided that won’t be paid as an occupational pension in the new system,” Terradas said.
Instead, Hapag-Lloyd has opted to stagger pension payouts in a maximum of five instalments, a decision that did not meet the resistance of the work council, he added.
Mercer advised Hapag-Lloyd in designing the new DC scheme with the possibility of deferred compensations, employer contributions, and matching contributions, that now apply to all hierarchical levels, he said.
Assets are kept in an external contractual trust arrangement (CTA) and invested via Fidelity’s life cycle funds, according to age groups, and without employees being able to choose the funds, Terradas explained.
Separately, Evonik has moved to offer its employees a capital market-oriented direct promise in the form of a DC plan, for the same reasons as Hapag-Lloyd, Barbara Schneider, benefits consultant at Evonik, said at the event.
The company’s new plan takes the form of a pension promise calculated on the amount of contributions paid by the employer and the employees – so-called Beitragsorientierte Leistungszusage (BoLZ) – with an 80% guarantee on contributions paid, according to Schneider’s presentation.
Assets are held in a CTA and invested via Allianz’s dynamic multi-asset strategy funds and money market funds, she said.
Evonik has switched to a DC scheme after a request by the financial regulator BaFin to close down RUK 18, a combination of Pensionskasse and a support fund (Unterstützungskasse).
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