The German leg of the ‘Rebuilding Pensions’ tour in Frankfurt to promote the European Commission sponsored report on second pillar pensions by Koen De Ryck, attracted an impressive cross-section of around 140 key industry representatives with the document hailed as an important reference for pushing forward the German pensions debate.
De Ryck, managing director of Pragma Consulting, comments: “There was a good cross-section of representatives for interested parties in the German market which was exactly what the Commission wanted. There was general agreement that this is a code of best practice and the questions were over how it could be put into a directive. I pointed out that it was a liberalising rather than restrictive report, and I think this was accepted by the audience.”
De Ryck says other issues raised included ways of increasing pensions coverage amongst companies in Germany, as well as issues of tax inequalities and the advent of DC plans.
And he says the general feeling was of the report being something Germany could work with.
“The majority of people were saying ‘yes’ we can use these recommendations, and if a directive were to go in the same direction it would be a reference incentive to get things moving in Germany. The Commission was certainly happy with the proceedings.”
Herbert Wunderlich, managing director and member of the board at Dresdner Bank Investment Group, co-sponsor of the German conference with State Street, adds: “Most of the experts did not believe that all the proposals could be transferred wholesale to the German system. However, there was an understanding that the importance of a guaranteed living standard after retirement can no longer be fulfilled by the first pillar.
Wunderlich says there was consensus on the report’s recommendation for best security by separating the pension fund from the sponsor, and on the prudent person principle.
“Everybody except the supervisory board said prudent man was fine, but wanted to know how it could be judged. For practical reasons it was noted that you have to have set limits for German law.” He noted the audience’s reassurance when the Commission representatives confirmed a directive would only affect ‘Pensionskassen’.