Hansjörg Müllerleile, director at Bosch Group, has welcomed German government reform proposals calling for the introduction of pensions without guarantees into the country’s second-pillar system.
“The draft,” he told IPE, “opens up remarkable ways for expanding occupational pensions without abandoning trusted principles.”
Last week, the government put its reform proposal (Betriebsrentenstärkungsgesetz) out for consultation.
The draft outlines plans for industry-wide pension funds without guarantees, either within existing schemes or new vehicles to be set up by social partners.
At Bosch Group, the concept of zero-guarantee pensions for new entries into its €3.2bn Pensionsfonds was introduced last year and then expanded to cover people retiring from 1 January 2016.
Müllerleile said Bosch founded its change of the pension plan on a solid agreement with worker representatives.
The legal framework for the amendments were later to be known as “Lex Bosch”; it is, in fact, an amendment to the law governing Pensionsfonds from 2015, allowing these vehicles to offer non-insurance-based plans for retirees.
“We have used the same cooperation between employer and employee representatives in amending our pension promises, which is now under debate for industry-wide pension plans at the federal level,” Müllerleile said.
He said the changes to the Bosch pension plan had been well received by workers and highlighted the importance of “proper communication”.
In a statement on the legal changes in 2015, Bosch pointed out that, if guarantees for new retirees were not made more flexible, workers would face a 17% cut in their pensions due to lower guaranteed returns in the current market.
Müllerleile said the government’s new proposal was “well-balanced”, as a pure defined contribution approach, combined with supervisory measures and a collective vehicle, would serve the needs of both companies and workers.
He added one note of caution, however, on the new law’s implementation.
“With regard to the exceptionally important implementation of IORP II for occupational pension vehicles, it has to be made sure that in the final law that no guarantees could trigger the application of Solvency II regulations to occupational pensions,” he said.
The association for company pension plans (VFPK) voiced similar concerns when the government first presented its ideas last year.
However, in its statement regarding the most recent draft for the new law, it said its initial fears had been allayed.