German government backtracks on industry-wide pension reforms
Critics of Germany’s proposed new industry-wide pension funds should offer constructive feedback rather than talk down the government’s work, the country’s minister for Labour and Social Affairs (BMAS) has insisted.
Speaking at the annual conference for German pension fund association aba, Andrea Nahles defended BMAS proposals to increase occupational pensions coverage by tweaking tariff agreements and allowing social partners to establish industry-wide, defined contribution (DC) funds.
She said she had received a lot of feedback after the draft proposal – dubbed §17b – was released and joked that some of it had even been supportive of the reforms.
The reform proposals were initially greeted by heavy criticism from the industry, with one legal expert warning that the idea only Pensionskassen or Pensionsfonds would be eligible vehicles was anti-competitive.
But Nahles warned the industry to be careful.
“It is very easy to talk down a proposal no one else dared to make,” she said. “But you have to be careful when you then don’t have anything to show for it.”
The minister said the “constructive” criticism offered up by unions and industry associations was very welcome, and sought to show BMAS was listening by highlighting three areas where changes to the initial proposals were possible.
She said BMAS understood that insisting only Pensionskassen or Pensionsfonds should be allowed to act as industry-wide vehicles could be too restrictive.
Instead, either type of pension fund or an insurer could be sub-contracted to offer retirement benefits, with the standalone organisation awarding the contract.
Nahles said such an approach would have the benefit of keeping costs low and noted that MetallRente operated on a similar basis.
The idea that workers not covered by collective labour agreements, or Tarifverträge, could see themselves benefit from the reform may also be dropped, after it met with resistance from a number of sources, including unions.
The final point where BMAS could envisage change, Nahles said, is in the area of benefit protection.
The initial proposal suggested that, as the new industry-wide schemes would no longer be directly backed by employers, at least a measure of protection could be offered through the German lifeboat fund, the Pensions-Sicherungs-Verein (PSV).
Instead of insisting on protection of benefits by PSV, Nahles said benefits could be insured by Protektor, the country’s scheme of last resort for life insurers set up by the industry in 2002.
As her comments drew laughter, the minister added that if social partners baulked at the idea of using Protekor, it was up to them to propose alternative arrangements.
“Why should there not also be competition between the lifeboat systems?” she asked, once again stressing that BMAS was open to what role PSV would play.
“If other mechanisms that offer a comparable level of protection are possible, then we are happy to evaluate these.”