GERMANY - German pension experts do not view the European Commission’s proposed review of the IORP Directive as a threat to the country’s occupational pension arrangements (bAV), according to a straw poll conducted by Towers Watson.

Following a conference held by the consultancy last week, head of bAV consultancy Thomas Jasper said this was a result of proposed IORP changes affecting only a small part of the overall sector.

Jasper said the IORP Directive only covered around 30% of what under German law is defined as bAV, namely Pensionskassen and Pensionsfonds.

“A significantly larger part of old age benefits in Germany is not covered,” he said.

However, Jasper warned against complacency.

“The development of regulation should nonetheless be watched closely to be able to prevent any unwanted consequences ahead of time,” he said.

“For example, increased capital reserve requirements and increased costs as a result of changes in management could put in question the continued use of pension benefits by Pensionsfonds and Pensionskassen.”

When polled, 36% of around 200 attendees said the claim that pension costs crush businesses was a myth.

Jasper also dismissed the imminent risk posed by low yields in the current market environment, despite liabilities increasing ahead of asset returns.

“Many occupational pensions will only be payable in several years or decades, meaning the current yield environment is not a reason to worry,” he said.

He added that many newer pension benefits were no longer bound to pre-determined increases, instead being linked to capital markets, resulting in these benefits being “immunised”.

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