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New German pension model ‘needs information rethink’

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Communications with employees and employers were informed and advised on pensions have to be “completely rethought” under Germany’s new pensions model, the Betriebsrentenstärkungsgesetz (BRSG).

Heribert Karch, managing director at the MetallRente pension fund, said communicating with beneficiaries was a top priority in the ongoing negotiations on the new pension model for the metal industry.

The MetallRente pension fund, led by Karch, was one of the fiercest promoters of the new industry-wide pension plans which have to be set up jointly by employer and employee representatives.

Karch said the scheme was already preparing an architecture under the new pension legislation, which could be presented before the unions’ day for the industry in autumn 2019 and implemented right after approval. 

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Speaking at a meeting of the Pensions Akademie think tank, Karch and Peer-Michael Dick, managing director of the employer representative group Südwestmetall, said different degrees of consulting would be necessary depending on whether new pension funds utilised auto-enrolment and the levels of contributions.

The BRSG model is a major shift in Germany’s pension system, as it marks the first time guaranteed pensions are forbidden. Instead, beneficiaries are to be promised a “target pension”, also called a “defined ambition” model.

Dick said Germany’s existing Pensionsfonds vehicles were a good model to provide the new pensions, as they facilitated non-guaranteed benefits.

No matter which vehicle was used, Karch pointed out it was yet to be decided whether a new one should be set up for the new model or whether certain services should be bought externally.

MetallRente is not the only provider looking at the new model, however. German insurers Alte Leipziger-Hallesche and Provinzial Nordwest both noted in separate press releases that they would be bringing products to the market to match the new “target pension” principle.

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