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Germany postpones discussion on 'Dutch-style' pensions

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Further debate on the German government’s proposal to introduce industry-wide pension plans has been postponed until 2016 after opposition from social partners.

The delay was confirmed by Jörg Asmussen, under-secretary in the Ministry of Labour and Social Affairs (BMAS) during a speech at the Handelsblatt conference in Berlin.

He stressed the ministry thought it was “worthwhile to continue to discuss its proposal” but added that “no draft will be ready to be introduced to the legislative procedures before 2016”.

The BMAS’s plans for new industry-wide pension funds, or Tarifpläne, were rejected last week by the social partners for increasing the system’s complexity and introducing further problems “without solving existing ones”.

Both unions and the employers’ association said they were open for further talks, but rather on amendments to the existing tax and social contributions.

The two areas have already been identified for review by the Ministry of Finance, which has commissioned the University of Würzburg to conduct a study.

Results of this first-ever comprehensive research into effects and incentives from the current tax and social contributions regime are expected by year-end.

The study is also one of the reasons the government has chosen to postpone further debates on how to increase participation in the second pillar.

Postponing further debate on the industry-wide pension plans, also known as §17b, named after the legal paragraph in the law on occupational pensions (BetrAVG) they would have to be set down in, was also necessitated by the implementation of the EU’s pensions portability directive. 

The German government will present its amendments to the occupational pension fund law (BetrAVG) to implement the EU’s new legal framework for portability and mobility “at the end of next week or the week after”, according to Peter Görgen, head of the department for supplementary pensions at the BMAS.

He confirmed at the conference the amendments would not discriminate between cross-border and domestic German migration.

One of the most debated points had been the reduction of the vesting period from five years in Germany to three years, as per the new EU standard.

But the BMAS has now softened the blow for employers as the new legal framework in Germany will only apply to contracts negotiated after 2018.

This way, the first transfers under the new vesting period can only take place in 2021 at the earliest, Görgen said.

Meanwhile, Asmussen confirmed that debates on opting-out models would be among the “other options” for increasing participation in the second pillar to be discussed in future.

However, Ingo Kramer, president of the Federation of German Employers (BDA), said any pressure to offer occupational pensions would be “clearly the wrong step” and a distraction from necessary amendments to existing regulation.

Overall, delegates at the conference said the debate on occupational pensions had been given a fresh spark by the BMAS’s proposal, even though most rejected the current draft.

Thomas Richter, chief executive at the German Investment Funds Association BVI, said: “For a decade, nobody wanted to talk about occupational pensions.”

He said the government’s commitment had now finally changed that, and that he was “happy the bird is finally up in the air”.

“At the beginning,” he added, “it does not matter whether it flies in the right direction.”

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