German trade union for service industries eyes new pension fund set-up
German trade union ver.di is reportedly planning to set up a pension fund for the country’s service industries that could model itself on the occupational pension scheme for the metalworking and engineering industries.
An article in the German broadsheet Süddeutsche Zeitung reported the plan last week, stating that the head of the trade union, Frank Bsirske, has been telling insurers about its plan to set up a Versorgungswerk for occupational pensions in the service sector.
This could make ver.di the first union to think about making use of the government’s proposal for a new type of pension plan without guarantees and possible opting out, although it is unclear if this is its intention.
These plans are provided for in the government’s proposal for pension reform, the so-called “Betriebsrentenstärkungsgesetz”.
It is currently being discussed by parliament.
But a spokeswoman for the trade union declined to comment, saying there was “not yet anything concrete”.
The article in the Süddeutsche Zeitung states that the trade union’s board wants to discuss the project at its next meeting and that the pension fund could be set up quickly.
It reports that the purported new pension fund would work with insurers and that MetallRente, an industry-wide occupational pension scheme for the metallurgy and engineering industry, could serve as a model.
The government’s pensions reform proposal is significant because, until now in Germany, companies offering pension schemes have been required to back any pension promise, topping up funding whenever there is a shortfall.
In an update on German pension schemes’ funding position yesterday, Willis Towers Watson said the government’s reform proposal for industry-wide pension plans without guarantees was “a step in the right direction” given that the existing requirement for guaranteed benefits constrained allocation to riskier but higher-yielding asset classes such as equities.
However, Thomas Jasper, head of retirement for Western Europe at the consultancy, said companies wanting to opt for the new type of pension schemes would have to accept certain constraints, namely having to seek agreement with the collective-bargaining partners.