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Collective labour agreements must lead pension change, says German minister

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Germany is unlikely to introduce radical changes to its pension system, according to its minister for Labour and Social Affairs, who argued that the government should only provide the legal underpinning for agreements struck independently by the country’s social partners.

Addressing the aba annual conference in Berlin, Andrea Nahles said she viewed her next big “construction project” instead as increasing occupational pension (bAV) coverage among the country’s numerous small and medium-sized enterprises (SMEs).

The minister, a member of the social democratic party (SPD), also said that while the brief mention within the coalition agreement to strengthen the bAV might sound “banal”, the wording was more a result of attempts to reach an agreement despite time pressure during negotiations.

Nahles added that the industry should see the lack of detail on bAV reform as an opportunity.

“This opens up the possibility – as it is not agreed in detail, unlike the case with the minimum wage – for us to take on board ideas, and I invite you, the aba, to do just that,” she said.

She said she viewed the first pillar as the most important part of retirement provision in Germany, and pointed to the losses incurred by savers during the financial crisis when wholly reliant on funded pension provision.

“What we have in Germany is a healthy mixture – of the state-funded, occupational and private, the Riester pension,” she said.

“We will not reform the system, in the sense that the basic set-up of the system will not change. If reforms are introduced, then it will be in the shape of changes to the system.”

The minister said the government’s stance would allow for security of retirement planning.

“The important and right pension reforms have already been introduced,” she said.

“To be completely clear – [the system can] withstand demographic change and is future proof.”

She added that she would be open to revisiting the four-decade-old occupational pensions law, but said she would not yet offer any concrete details.

“For me, the legal framework is, at the end of the day, only an addition to what is already being negotiated within the collective labour agreements.”

Her comments will have been welcomed by the aba itself, with the head of the organisation, Heribert Karch, stressing that a strong pension system needs a dual focus on state and occupational funding.

“An agreed and thoroughly evaluated political mix of fiscal, social, collective labour measures can address the challenges before us and strengthen the dual core,” he said.

Nahles also addressed the issue of the European Commission and its involvement in pensions policy.

“Since I have been involved in politics, I have been aware of the European Commission’s Portability Directive – and have been getting annoyed by it,” she said.

She added that she remained worried by the revised IORP Directive, published by the Commission earlier this year, and stressed that she would not allow a “weakening” of the bAV.

“The White Paper on Pensions speaks of strengthening the occupational pensions sector – but then it also has to be implemented in such a way to allow for it,” she said.

“At the moment, as I said, I still have my doubts that it’ll be strengthened.”

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