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ABA report: Big ‘rise’ in German second pillar coverage

GERMANY - Around 60% of employees in the country’s private sector currently own some type of an occupational pension, up from 38% at the beginning of 2002, the German occupational pensions lobby aba has reported.

Citing preliminary figures from the polling group infratest dimap, aba also said that 57% of employees in Germany’s public sector currently owned an occupational pension. This figure does not include civil service employees.

“Unfortunately we couldn’t present the final figures from infratest dimap, but if these figures turn out to be correct, they would be fantastic”, remarked aba chairman Boy-Jürgen Andresen, who spoke at the pensions’grouping spring meeting in Bonn.

“The 60% statistic would also mean that Germany is very much keeping with the overall European trend,” Andresen said, noting that 62% of employees across Europe currently owned an occupational pension.

Andresen attributed the sharp rise in occupational pensions among German employees both to the Riester pension reforms of 2002 and to industry efforts to promote retirement saving. The Riester reforms gave employees in Germany the right to set aside 4% of a monthly salary tax-free for retirement.

However, the aba chairman warned against complacency, saying German lawmakers had to maintain the right conditions for occupational pensions to flourish.

“What I mean specifically is that employee contributions under the Riester pension must remain free of social taxes beyond 2008,” Andresen said. The tax exemption for these contributions is due to expire that year.

Given the positive trend with German occupational pensions, Andresen added that aba opposed making corporate or private saving for retirement mandatory.

Several leading pension experts, notably Professor Bert Rürup, the government’s chief economic adviser, favour making second- and third-pillar saving mandatory to relieve the tremendous pressure on Germany’s state-run pension scheme.

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