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German study identifies main obstacles to spread of pensions among SMEs

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A report commissioned by the German government has identified complexity and a general lack of employer commitment as the biggest hurdles to the growth of occupational pension funds in the country.

The findings were published in a study [in German] conducted by the college of economy FHDW in Paderborn and Kienbaum Management Consultants in Hamburg.

Germany’s Social Ministry commissioned the study to ascertain the main obstacles preventing small and medium-sizes enterprises (SMEs) in particular from offering pension plans.

The study cited complexity of topics related to occupational pensions, a lack of commitment by the employer and employee representatives, and high costs.

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The authors of the study said they lacked the necessary data to determine exactly which of the 40-odd general obstacles identified applied specifically to SMEs.

They did say, however, that a number issues did present SMEs with bigger problems than they would larger companies.

In a survey of industry experts conducted as part of the study, the chief obstacles cited for companies with fewer than 100 employees were employer fears over the cost of information and administration, the lack of occupational pension specialists within a company and the lack of knowledge regarding occupational pensions.

According to official statistics, approximately 40% of German companies have fewer than 50 employees.

For the study, the authors also interviewed a number of international consultants, as the numbers of SMEs participating in the second-pillar pension system in many countries is smaller than in Germany.

They found that, to varying extent, the problems of complexity, lack of knowledge, high costs and portability among employers also prevailed in Belgium, Ireland and the UK.

They noted, however, that initiatives such as TV campaigns in the UK and tax incentives in Ireland had been helpful in encouraging the use of occupational pension schemes.

The study also looked into collective agreements for certain groups of workers to ascertain whether they might help SMEs in a given industry or sector to participate.

Speaking at the occupational pension association’s conference earlier this spring, Andrea Nahles, minister for Labour and Social Affairs, cited these collective agreements – the so-called Tarifverträge – as the building blocks for the increased use of occupational pension plans.

Again, however, the authors said they lacked the necessary data to make a final assessment of the situation.

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