German employees demand better pension plans, finds Towers Watson survey
GERMANY - Young Germans want employers to offer better pension plans and are, against expectations, very interested in saving through occupational pension funds, Towers Watson has found in its latest survey.
Around three-quarters of the more than 2,000 surveyed employees from larger companies said they were willing to turn part of their salary into a pension scheme contribution.
Discussing the results with IPE, Jens Denfeld, senior consultant at Towers Watson Germany, said: "We were surprised to find that so many people want to save for their retirement via an occupational pension plan."
He added that it was also unexpected to see so many young people already thinking about their pension. According to the survey, respondents under 35 mentioned the second pillar as often as the first pillar as main source of income upon retirement.
"Today, young people ask about a pension plan during job interviews and companies know that they are willing to take money in the hand for that," Denfeld added.
Currently, however, the share of people contributing to existing pension schemes in companies is still quite low.
Thomas Jasper, head of occupational pensions at Towers Watson Germany, said that in those companies only offering the legal minimum and which are providing little information on the pension plan, the participation rate is around 10%.
"In companies where the pension plan is set up offering flexibility and safety - which are two main points mentioned by employees in our survey - and who are communicating the added value of the pension plan up to 45% are possible," Jasper added.
Around 80% of the surveyed already have some kind of pension plan but only half of them fully understand it, Towers Watson also found.
Denfeld noted that another reason for the gap between people's intentions mentioned in the survey and the reality in companies is the fact that people are only just starting to realise the importance of saving for their own retirement.
Under current German regulations, companies have to offer employees the possibility to transfer part of their gross salary into a pension plan - mostly a simple individual contract with an insurer, known as a Direktversicherung - if they are asked to do so and they do not have to contribute to the plan.
"Some employees do not even know that they have the right to demand such a pension plan and some companies are not reminding them because it is an administrative effort," explained Denfeld.
However, both pension experts are convinced that with the increasing fight for qualified workers, companies will be increasing their efforts to set up well thought out pension plans.
The survey also found that education only plays a small role in people's awareness of pension issues.
Jasper noted that it was more about the information provided by the employer and the type of plan that was set up, with "employer contributions making it even more credible".