Germany’s occupational pensions association Aba expects “small changes” to investment rules regarding underfunded Pensionskassen, in a possible reform of the second pillar pension system.

The occupational pension association said that “a lot of work” was done this year on the topic of pension funds and their possible temporary underfunding.

Stakeholders have also discussed a proposal allowing Pensionskassen to experience underfunding – at book value – under certain conditions, for a defined period of time, and in agreement with sponsoring companies.

Aba also expects possible changes with regard to the definition of Pensionskasse as a result of the new rule lifting earning limits for employees withdrawing first pillar pensions early (Wegfall der Hinzuverdienstgrenze).

A list of possible changes to company pension rules has been drafted following the dialogue – Fachdialog Betriebsrente – and intensive work of stakeholders, Aba said.

Rolf Schmachtenberg, state secretary for the Labour and Social Affairs Ministry (BMAS), said that the 24-point draft law (Betriebsrentenstärkungsgesetz 2024) is being prepared.

The draft law is also dealing with the topic of opening up the social partner model to third parties not bound by collective bargaining agreements.

On the social partner model, discussions are focusing primarily on the key word “relevant”, to understand whether employers and employees not bound by collective agreements can agree on the application of the relevant collective agreement regulations, Aba said.

It is currently still unclear what kind of legal changes will come in 2024 for the second pillar pension system, Aba said, adding that the planned improvements to support low earners could fail due to budget restrictions.

Meanwhile, the government plans to cut €600m in subsidies to the pay-as-you-go system, to guarantee a pension level of 48% of the average wage until 2039, and to kickstart the Aktienrente (Generationenkapital) equity fund in the first pillar as part of the pension package II that should be approved in the first quarter of 2024, it said.

A spokesperson for the finance ministry told IPE that plans for the equity fund for 2024 remain unchanged, but require legal basis through the pension package II under the leadership of the labour ministry.

The ministry declined to comment on the amount of capital to be deployed to kick start the equity fund, saying that discussions are currently ongoing within the government, and parliament has yet to discuss next year’s state budget.

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