GERMANY - The pension provider Dgbav has warned that smaller companies are struggling with transparency rules for pensions. (amends Dgbav's label)

Insurance-based second pillar vehicles, like Pensionskassen, have to disclose costs in absolute figures stating each cent whereas non-insurance-based vehicles, such as certain forms of Pensionsfonds, either do not have to disclose costs at all or just as a percentage of the size of the pension.

This is one example raised by the pension provider Dgbav, to illustrate the confusion facing companies on the most feasible way of offering their employees occupational pensions.

"More clarity in the regulations and more comparability would be desirable but whether the various groups will ever be able to decide on a common denominator remains to be seen," Ulf Kesting, chief executive of the Dgbav, told IPE.

While he noted "too much transparency leads to confusion", he also added that certain parts of the regulations were too vague and needed clarification.

One case in point is the full disclosure of contracts to the pension fund member which is not explicitly stated in the legislation but practiced by many providers.

It is not only the employee who has to deal with a flood of information but also the employer, which now has to store detailed data on every contract.

"The larger the company, the easier it is to deal with these requirements but small and medium enterprises are struggling," Kesting said.

He noted often these companies have to get the help of professional consultants to see their way through the various possibilities and offerings.

Kesting is not, however, without optimism. He is convinced in two years' time people will have become used to the additional requirements and think them normal.

"The new regulations certainly will not slow down the growth in occupational pension offerings," he said.

But he added that the easier and clearer the regulations are, the more likely employers will be to join the second pillar.

Kesting also said that the option of unfunded pension reserves was becoming less attractive as employees demanded certain guarantees which could often only be granted through a vehicles with insurance-style backing.

Therefore, insurance-based vehicles such as Pensionskassen are seeing the largest growth while non-insurance-based Pensionsfonds mainly grow because large groups are setting up individual Pensionsfonds.

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