Reform of Pensionskassen investment rules could be approved before elections, says aba

The German finance ministry could approve the investment regulations reform allowing riskier investments of Pensionskassen – one vehicle to offer occupational pensions in Germany – before the end of the legislative period, bypassing the vote in Parliament (Bundestag).

The proposal to change the investment ordinance applying to Pensionskassen is on the Ministry of Finance’s radar and could be approved before the end of this legislative period, Georg Thurnes, chair of the occupational pension association aba, said during the occupational pension conference Berliner bAV-Auftakt yesterday.

“The [investment] regulation is not necessarily [part of] a legislative procedure; it can come from the ministries, and it has come to my attention that this regulation has landed on the desk of [finance minister Jörg] Kukies,” Thurnes said.

The aba chair added that it is not yet clear whether the investment regulation reform for occupational pension funds will be approved before the general elections on 23 February.

If approved, the changes would represent the only piece of pension reforms drafted by the traffic light coalition government – Social Democratic Party (SPD), Liberal Party (FDP) and Greens – approved in this legislative period.

The process to reform all three pillars of Germany’s pension system ended abruptly with the collapse of the coalition government in November.

The law to reform the second pillar drafted by the traffic light government changed the investment regulations for Pensionskassen, expanding investment opportunities by allowing temporary underfunding. It foresaw increasing the share for risk capital investments from 35% to 40% of the security assets of Pensionskassen to further diversify portfolios.

Changing investment regulations will make it easier for small insurers and Pensionskassen to invest more in riskier asset classes such as venture capital, the government said, introducing the WIN-Initiative to boost investments in start-ups.

The traffic light government also planned to introduce a quota of 5% for infrastructure investments of Pensionskassen.

Aba, the financial supervisory authority BaFin and the finance ministry agreed on flexible funding rules for Pensionskassen that could be put for approval “pretty quickly”, Thurnes added during the event.

The traffic light government aimed to strengthen occupational pensions by reforming the social partner model, relaxing rules to offer defined contribution (DC) pensions within the framework of collective bargaining agreements.

Thurnes said during the event that the second-pillar reform planned by the government was not a game changer, but some of the proposals represented a step forward.

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