When the Riester reforms were drawn up, Deutsche Bahn’s management got together with its social partners to discuss which of the three main new pension types it should go for and draw up a new collective bargaining agreement to implement it.
They unequivocally chose the capitalised pension fund, not just because it would allow return potential based on assets invested in the stock markets and elsewhere but, as with many other large groups, relieve the burden of the existing book reserve system that was exclusively financed by Deutsche Bahn.
DB’s new retirement system will allow group employees to choose how much they wish to contribute each month to the new fund and whether to make the contributions from gross or net pay, or a combination of both.
Deferred compensation credits from the exisiting system will be transferred to the new fund and credits will continue to be made until the deferred compensation system is discontinued in 2008.
Deutsche Bahn does not intend to establish and run the new fund within the group since it believes it lacks the knowledge and experience to do so.
The company says it will appoint a pension fund provider, most likley an insurance group with an asset management capacity to both set up the fund and run it thereafter.
Representatives from group companies will get together to choose the most suitable pension fund provider. The fund will have a guaranteed element, though DB hopes this will become academic, as its objective is to maximise the fund’s return potential by adopting a carefully-structured and well-thought out investment strategy.
DB will set up an internal investment comittee that will work closely with the appointed pension fund provider in determining the strategy.