GERMANY - A German government report on pensions has revealed there has been little growth, for the third year in a row, in the membership of Pensionskasse as share of employees with occupational pension accounts stood at 52% last year and is likely to stay at that level by the end of 2008.

In its latest report on the retirement system, the German government reported there was an increase of members in the second pillar from 11.6 million at the end of 2005 to 12.1 million in 2006 later and 12.3 million by the end of 2007.

However, despite this increase, the percentage of people in the private sector with occupational retirement provision as part of the whole working population has remained the same at 52% over the last three years - meaning the work force is growing faster than the number of pension fund members.

Asked whether they thought this share is going to rise in 2008, the majority of employers (60%) interviewed by the social ministry said it will remain the same and only 13% said it will increase while the remainder stated they did not know.

The share of companies offering supplementary pension schemes for their employees  increased slightly from 48% in 2005 to 50% and then 51% by 2007.

Nevertheless, the social ministry noted in a statement the growth in the occupational pension sector has "overcome its decade-long stagnation and is on the road to growth since the major reforms of 2002".

The government pointed out the further exemption for contributions to Pensionskassen from social insurance payments granted last year is also influencing the development positively. (See earlier IPE article: Germany shows support for deferred compensation scheme)

In the report, it was also pointed out the state-subsidised third-pillar vehicle, the Riester-Rente, had 12 million members by the end of September 2008.

It was also pointed out the state retirement system was well-financed with a current €15.7m surplus which means the contribution rate can be kept at 19.9% as planned and will only be increased to 20% and 22% in 2020 and 2030 respectively.

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