No unions or employers in Germany have yet begun openly negotiating the country’s new form of pension plan, delegates at a conference in Frankfurt heard yesterday.
Several German unions and employer representatives are negotiating various amendments to minimum wages and employee benefits, but none of the groups currently negotiating have put pension plans without guarantees on the agenda.
The new plans will become available from next year as part of the “Betriebsrentenstärkungsgesetz” (BRSG) legislation, agreed earlier this year.
“You can be sure [unions and employers] are not sleeping but thinking a lot about this,” said Heribert Karch, managing director of the industry pension fund MetallRente and chairman of the German pension fund association aba.
Speaking at the Faros Institutional Investors Forum during the EuroFinance week in Frankfurt, he pointed out many of the points on the current agenda have been waiting to be negotiated for a year or more and are often more pressing than the BRSG reforms.
In addition, the new occupational pension plans are something completely new that none of the social partners have ever discussed before, as it will be the first time plans have been introduced without a capital guarantee of some kind.
“The topic is being discussed but there is also a lot of caution still,” said Karch.
Ulrich Mix, managing director at Deutsche Pensions Group, added: “Many are waiting to see what these pension plans will look like.”
Another hurdle was a limitation meaning the new plans were only available for companies that have signed a collective bargaining agreement (Tarifvertrag).
However, all companies and employers can introduce certain elements from the new law, including subsidies for lower income employees or smaller businesses.
“Some companies which are not yet doing anything when it comes to occupational pensions are afraid they might get forced to join a collective bargaining agreement if they do so – and others do not yet really believe that the new plans really mean pay-and-forget for employers,” explained Mix.
The German government hopes the pension plans will lead to higher coverage in the occupational pension sector.
However, Silke Stremlau, responsible for sustainability and company development at pension provider Hannoversche Kassen, said she had her doubts about this aim.
She said: “We were hoping the new law would make occupational pensions more attractive but as yet we have not seen the momentum that brings our members, many of which are lower earners and outside a Tarifvertrag, to demand additional payments from their employers.”
Under the BRSG, employers will have to pass on any savings they make from transferring money directly to a pension fund and not paying incidental wage costs to the pension plan.
Karch emphasised that unions and employers would have to come up with a strong pension model guaranteeing contributions for all employees.
“They are also aware that they will have to set an investment strategy but currently they are still in the wait-and-see mode,” he added.