The German regulator has admitted that members of the pensionskassen retirement schemes could miss the proposed safety net for schemes whose parent companies have gone bankrupt.
An official for the Federal Financial Supervisory Authority, Bafin, told IPE that it was a grey area whether the 150 Pensionskassen would be allowed to join security funds – Sicherungsfonds - to guarantee that pensions are paid in case of insolvency.
The lower chamber of the German parliament, the Bundesrat, has passed a law compelling pension providers to join the security funds but leaving unclear the future of the Pensionskassen.
This new law is part of the reform of the Law for Insurance Supervision, VAG, and comes as an answer to the equity market crisis from 2001 to 2003, which put some insurance companies and their pension schemes in difficulties.
As a result of the law reform, two voluntary funds for life and health insurance, Protector and Medikator, have been set up to potentially manage the compulsory security funds, Bafin said.
But the Pensionskassen, whose legal framework is similar to insurance companies, are not required to join the security funds, the official added, while admitting it was still early days for the regulations to be put into practice.
The Pensionskassen could apply to join one security fund, but could be refused, especially in the case of small, older Pensionskassen run by a single sponsor, he said.
But bigger and more recent pensionskassen run by multiple sponsors would probably be allowed in more easily, the spokesman said.