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German companies, unions unite in opposition to industry-wide pensions

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Only days after the German government and social partners held ongoing talks on the possible introduction of industry-wide pension funds in the country, unions and employer representatives published statements rejecting the proposal outright.

In October last year, the Labour and Social Ministry (BMAS) presented a first draft proposal setting out how sector-wide pension plans – or Tarifpläne – might be introduced in Germany to “help strengthen the construction and dissemination” of occupational pensions.

However, various industry stakeholders – particularly the social partners – rejected the proposal, which would have introduced pure defined contribution plans into the pensions system for the first time.

An amended proposal presented at the end of January 2015 reinstated minimum guarantees, yet it still failed to win over the social partners.

In separate statements, union federation DGB and employer association BDA agreed that, despite the government’s changes, a number of “crucial” problems – such as insolvency protection, or the ring-fencing of existing pension plans to prevent a “race to the bottom” in terms of guarantees – remained.

The DGB claimed the proposal would enable companies to shirk their liability responsibilities, while the BDA argued that the ability to transfer guarantee promises should apply to all pension models, not just the new Tarifpläne.

The employers’ association went so far as to say that even an amended proposal would fail to address necessary changes to the existing regulatory framework for occupational pensions – regarding tax incentives and bureaucratic simplification, for example – and that it should therefore “be rejected” .

For the DGB, the introduction of yet another pensions vehicle into the German system would simply increase complexity, which the unions believe is one of the major factors deterring small and medium-sized enterprises from setting up pension plans.

The unions also questioned the vehicle’s ability to increase company participation in the second pillar, as some industries would have to restructure their collective agreements completely to introduce such plans.

Further, the DGB argued that the proposal to allow non-member companies to join these pension plans would be detrimental to the “spirit” of tariff unions, whilst warning of “free-loaders”.

The association stressed that it would continue a “constructive dialogue” with the government on occupational pensions, but it also added that, like Germany’s employers, it would prefer to “convincingly address” existing problems than “create new ones”.

Readers' comments (2)

  • From this article, it seems that the German opposition is not to industry-wide pensions at all, but to DC.

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  • Dear Peter!
    Thank you very much for your comment. It is true that the biggest reservation is against the introduction of more DC like pension systems.
    However, the article is about the rejection of the government proposal as it stands.
    Also, the unions do criticise the idea of industry-wide pension plans being open to non-member companies and "free loading" off union achievements.
    Additionally there is criticism against these plans bringing even more complexity to the system - no matter whether they are in fact DC or not.
    Regards, Barbara

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