German industry-wide pension fund Metallrente has lowered the interest it will grant on members’ assets in the insurance part of its multi-employer plan.
Members in the metal and electrical industry scheme’s insurance-based plans with the highest guarantees have been granted an uplift of 3.45%, down from 3.65% last year.
Average annualised performance of the Metallrente Pensionsfonds since inception in 2002 fell slightly last year to 5.2%, compared to 5.9% in 2016 when the figure was last reported.
The Pensionsfonds is one of the products offered by Metallrente for companies to implement an occupational pension.
Interest among employers in the Pensionsfonds structure has increased in the wake of the introduction of the Betriebsrentenstärkungsgesetz (BRSG) reforms, which took effect at the start of last year and brought some changes to subsidies for smaller companies setting up pension plans.
“The BRSG has given an unexpected boost to the subject,” said Heribert Karch, managing director of Metallrente.
Additional tax advantages are granted for pension plans set up for lower earners, while employers have to pass on savings made from employees transferring part of their wages into pension plans.
With 72,000 new members joining last year, Metallrente said it had achieved a “true surprise record”, as this marked an increase of almost 50% compared to 2017.
The provider said products with lower guarantees and higher exposure to return-seeking assets were chosen more frequently now as they were “more attractive than classic guarantees”.
Social partner co-operation yet to take off
Another feature of the BRSG law – which is so far still unused – is the ability for employers and employees to jointly negotiate the creation of new industry-wide pension funds.
So far, Metallrente is one of the few occupational pension plans to have been set up as a result of co-operation between employers and employees.
“Our results show that pension plans set up by social partners are seen as very trustworthy,” said Karch.
He argued that collective pension funds set up by the social partners were the best form of retirement saving for solidarity between cohorts, as well as being “the most effective form”.
Karch – who is also chairman of the German pension fund association aba – also called on politicians to do away with inequalities relating to taxes and social contributions that were still in force for some forms of occupational pension savings.