Heribert Karch, chairman at the aba, Germany’s pension fund association, has described the eight-line mention of occupational pensions in the preliminary government coalition agreement as a “step forward” and an “encouraging signal”.
After the elections in Germany in mid-September, the conservative CDU and socialist SPD parties agreed on a coalition agreement that is most likely to be the basis for the formation of a two-party government.
In the coalition’s 185-page agreement, the term “occupational pensions” is mentioned only in one eight-line paragraph.
It reads: “Retirement provision in an age of demographic change becomes more stable when it is based on several strong pillars. We will, therefore, strengthen occupational pensions.
“It must also become a standard for employees in small and medium-sized enterprises (SMEs). To achieve this, we want to create the framework to ensure occupational pensions become widely available in small enterprises. We will research whether and how possible hurdles can be removed at SMEs.
“We will also ensure that the good framework for occupational pensions remains intact within the European framework.”
For Karch, the very mention of pensions is a “very encouraging signal”, in which the government “clearly commits to strengthening occupational pensions”.
He added that such a paragraph had been absent in any coalition agreement since the contracts on creating the third-pillar Riester pension in 2002.
“All the talks I had with political representatives, and my gut feeling, tells me they are taking this really seriously,” he said.
“The coalition treaty can also be seen as a confirmation by the government that the occupational sector was right – the pensions system needs reforms.”
Following recommendations by the aba, the government is now looking to commission a study on how tax hurdles hinder the spread of occupational pensions among SMEs.
Karch stressed the importance of increasing second-pillar pensions across the whole of Germany, not just for SMEs, although he conceded this segment of the economy was “worst off”.
He also urged the government to create a more sustainable pension system, with a “dual core” – in other words, carried by the state as well as companies.
At the European level, the aba chairman noted “with great concern” a “development contrary to the initial White Paper” on Pensions.
In prior versions, he said, the White Paper stressed the importance of social partnerships between the industry and the state.
“But now,” he said, “it is simply back to keywords like level playing field, marked-to-market, PRIPs and Solvency II – as if occupational pensions were just products for sale rather than agreements with employer support.”