Germany’s pension insolvency vehicle, the Pensions-Sicherungs-Verein (PSVaG), has for the first time since its inception in 1975 set the contribution rate for companies to 0 per thousand.
Because so few insolvencies were reported this year, the PSVaG will not have to take on pension liabilities from companies in financial trouble.
The PSVaG also waived its right to set advance payments for 2017 but added that it would review this decision early next year.
The PSVaG said there were other factors that led to its decision to set the rate at 0 per thousand, down from the 2.4 per thousand (0.24%) the companies had to pay from their on-book pension reserves last year.
It pointed out that it had received surplus payments from the life insurance group that is paying out the pensions taken on by the PSVaG on behalf of insolvent companies.
Further, some funds had come in from insolvency claims, and there is still €782m in the fund from last year’s contributions.
According to German law, all companies with on-book pension reserves and DBOs have to pay a part of their pension assets into the PSVaG.
Currently about 94,400 companies are members of the PSVaG, with pension assets amounting to around €333bn.
Companies with Pensionskassen are exempt, as they are insurance-based.
For setting up or joining a Pensionsfonds, companies get a discount of 20% on their PSVaG contributions.
The long-term average contribution rate stands at 2.8 per thousand (0.28%).