GERMANY - Forcing German occupational pension funds to comply with incoming Solvency II fails to recognise unique aspects of the German system and risks weakening it, Towers Watson Germany has warned.
The consultancy's head of retirement solutions, Reiner Schwinger, argued that occupational pensions (bAV) are already doubly insured in the German system, with the employer stepping in should either Pensionskasse or Pensionsfond be unable to cover the pension promise.
He also pointed to the existence of the insolvency fund PSV.
"Such tightened regulations would weaken occupational pension systems due to the increase in capital being dictated," he said.
Towers Watson also said that, unlike with insurance companies, where profit was a motive, employers only saw this as a way of offering occupational pensions.
It argued that the conflict of interest that could arise between generating profit and acting in the interest of members was therefore "not possible".
Schwinger said an all-inclusive approach, incorporating bAV and insurance companies, would be inappropriate.
He added: "It would be more sensible to allow for a graded regulatory approach, taking into account the unique aspects of bAV in Germany.
"Applying Solvency II regulations to occupational pension systems would render them uneconomical and therefore less attractive."
The consultancy said that, in light of the demographic change in Germany that will see its population fall by approximately 20m over the next four decades, bAV needed to be seen as a cornerstone of old-age provision.
No comments yet