German government revises proposal for industry-wide pensions
The German government has presented a revised proposal to introduce “Dutch-style” pension plans covering whole industries that are part of collective agreements.
Under the new draft law, companies would be allowed to “rid themselves” of pensions liabilities.
However, minimum guarantees would have to be offered by the pension plan, which, in turn, would be protected under the existing pension protection scheme – the Pensionssicherungsverein (PSV).
Presently, the banking, metal and building industries are some of the few in Germany covered by single industry-wide schemes.
In the autumn of 2014, the government published its first proposal, but the local pensions industry, wary of the inclusion of yet another vehicle in the second pillar, was openly critical.
The government’s most recent proposal states that any new vehicle to cover entire industries must be set up as either a Pensionskasse or a Pensionsfonds.
As an exception, companies that are part of collective-bargaining agreements will be allowed to offer defined contribution plans. However, in this case, the pension provider will then have to offer minimum guarantees.
To ensure these guarantees, the new vehicles – be they Pensionsfonds or Pensionskassen – must be covered by the PSV lifeboat scheme.
Currently, companies setting up a Pensionskasse do not have to make contributions to the PSV, as Pensionskassen are considered insurance-like organisations.
Pensionskassen set up as collective industry-wide vehicles, however, would not have to pay as much into the PSV as Pensionsfonds, the government said.
With the new pension plan, the government aims to increase the introduction of occupational pension plans in Germany, particularly among smaller companies that have so far been unable to take on additional liabilities.
The government has also mooted the possibility of allowing companies that are not part of collective-bargaining agreements to join such industry-wide pension plans.
It added that industry-wide pension plans would also “mostly solve the persisting problem of portability” in the German job market.
To get more of a sense of the state of the German second pillar, read German government to ‘strengthen’ occupational pensions sector