GERMANY – The German Federation of Employers (BDA) has called for tax exemptions for pension plans, rejected any kind of mandatory system and warned of overregulation by Brussels.

In a report (in German) outlining its views on how to strengthen the second-pillar pension system, the BDA said the capital-requirement debate around Solvency II and the revised IORP Directive had "already led to confusion among companies" and "prevented some planned outsourcing to pension funds".

The association also called on the German government to create a separate supervisory entity specifically for occupational pension vehicles.

It said current regulation under the insurance supervisory law (VAG), as well as supervisor BaFin's general approach, "failed to take into account the characteristics of occupational pension funds" – namely Pensionskassen and Pensionsfonds.

The BDA argued that the existing regulatory framework made the transfer of liabilities and assets through mergers, acquisitions or other company transactions "complicated and sometimes even impossible'.

"On the European level," it added, "the difference between insurers and occupational pension funds has already been recognised, so the BaFin should therefore create a separate working group for occupational pension funds."

The Federation of Employers also rejected other recent proposals from Europe, including the Portability Directive, which could "damage occupational pensions considerably and hinder its further growth".

Last week, Deutsche Bahn's logistics subsidiary Schenker cited "onerous regulation" as the reason behind its decision to outsource its pension fund to a multi-employer scheme.

Employers also see the introduction of an opting-out model, mulled by some stakeholders in the industry, as a burden for companies.

The association argued that any kind of mandatory system would merely increase liabilities for companies funding pension promises, constituting "yet another compulsory levy".

It added that, in recent years, several new national regulations, covering risk-management requirements and accounting rules, had further increased the burden on companies.

The federation reiterated calls for changes to tax laws for occupational pensions, such as a doubling of the tax-free amount that can be transferred to a pension fund.

It also demanded an exemption for future service liabilities, and from the controversial financial transaction tax.