GERMANY - The German province of Bavaria and its northern neighbour Thuringia want to halt contributions to their civil servants pension funds to save money.
In Bavaria, the government is planning to suspend contributions to the €4m pension fund for civil servants, which began collecting funds in 2008.
The province is paying in €500 per month per new employee. Fixed contributions had initially been planned until 2016, but already in December last year those contributions were frozen in the wake of the financial crisis.
The fund generated an 11.75% return in 2009, with a portfolio of 77% bonds, 20% equities and the rest in cash.
The assets are managed by the German federal bank, and since May 2009, the equity portfolio has been split 50/50 between the DAX and the DJ Euro-Stoxx-50.
In Thuringia, among the first provinces to set up a pension fund for civil servants in 1999, parliament is deliberating whether to freeze contributions to the fund.
A draft presented to the regional MPs calculated that this measure could save as much as €8m per year.
The authorities pointed out that retirement provision was currently financed on debt and that this was irresponsible in times of an increasing deficit.
However, the local government stressed that the fund would not be closed, but remain open for future contributions.
The financial crisis has already scuttled the creation of one pension fund in Lower Saxony, but Brandenburg recently decided to go ahead with creating a fund as planned, while North Rhine-Westphalia decided to top up its fund with €114m.