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ABA meeting: Andresen sees ray of hope

GERMANY – The head of the German corporate pension association has said the pension reform is not entirely "made of shadows".

Boy-Juergen Andresen, chairman of the Arbeitsgemeinshcaft fuer Betriebliche Alterversorgung, did not spare critics at the association’s annual conference in Bonn today. Andresen said that the pension reform also contained some rays of hope.

"I am not saying so out of sheer hope, or because I am optimist by occupation, but out of conviction,” he said.

Acknowledging that the government had a "hard task", Andresen discussed the hot topics of pension reform. Among the themes discussed, was the controversial health insurance.

Pensioners have until last year contributed to health insurance by paying seven per cent of their pension annuities. Through the reform the rate has been doubled to 14%, he said.

He also criticised the change of name for one of the key pension-reform laws. The "law for the improvement of company pension schemes" has been renamed the "law on pension schemes”.

"ABA does not see any occasion for such a change," he said.

Pension schemes "make sense" and bring advantages for workers, the state, the economy and employers, Andresen said.

The Rentensteurgesetz, the law increasing taxes for pensioners while progressively making contributions to pension schemes free of tax, was also an issue. If the bill, already passed by the lower chamber last week, became law, some pensioners would pay twice for their health insurance.

ABA’s general manager, Klaus Stiefermann, told IPE that while the new intended law seemed to "the naked eye" a radical one, it could bring costly extras. Stiefermann said that the law could turn out to be "no big surprise, no big-deal".

As things stand now, employers and workers pay 20% taxes on annual contributions to pensionskasse or direktversischerung products. The maximum sum payable is 1,752 euros a year and the entire sum would go towards pension provisions.

The new law would make it possible to pay 1,800 into the system, but employers and employees should also pay an extra 20% each to pay for health and unemployment insurance.

"So, it is true one would pay 1,800 euros tax-free, but it is after all only 48 euros more than what they pay now. It is something - but ABA will ask for more."

As pensioners will also pay 14% of their pensions towards health insurance, Stiefermann said: "They would kind of pay twice for the same service.”

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