The number of the people entitled to occupational pensions in Germany has clearly lost momentum in recent years, increasing from 20.5 million in 2015 to 21.0 million in 2019, according to the Alterssicherungsbericht 2020, a report by the Federal Ministry of Labour and Social Affairs.
The ministry compared the progress in recent years with the ‘golden era’ of occupational pensions, between 2001 and 2005, when the number of active insured jumped from 14.6 million to 18.3 million.
Occupational pensions have shown a small increase after a period of stagnation, it said, but still lag behind the dynamic growth of the labour market.
The number of people with direct insurance policies increased the most from 4.9 million in 2017 to 5.2 million in 2019, while the number for direct promises (Direktzusage) and benefit funds (Unterstützungskassen) remained unchanged during the same time period at 4.7 million.
The number of Pensionsfonds contracts remained unchanged too, at 0.5 million, while Pensionskassen saw a decrease from 4.8 million insured in 2017 to 4.7 million in 2019.
The share of employees with company pensions was highest in the credit and insurance industry with 88%, the report said, followed by the industry sectors such as energy and mining with 70%, and health, social services, education and teaching with 67%.
The number of employees subject to social security contributions with an occupational pension increased by 200,000 year-on-year in 2019 to 18.2 million.
“These are impressive figures, but we must continue to push to spread company pensions,” said Georg Thurnes, chair of the board at occupational pension association Aba, pointing in particular at low earners and small companies.
According to the report, over 60% of the companies with fewer than 10 employees stated they were not aware of the new opportunities offered by the law to reinforce occupational pensions introduced in 2018 – Betriebsrentenstärkungsgesetz (BRSG).
It also showed that 47% of employees with occupational pensions entitlement had used the option of deferred compensation in 2019.
The subsidy granted for contributions to earners with a monthly wage of less than €2,200 as part of the BRSG was very popular, the report said.
The subsidy doubled with the new law on the basic pension from a maximum of €144 to a maximum of €288, and the monthly income was raised from €2,200 to €2,575.
However, collective agreements based on the social partner model, without employer liabilities and guarantees, have not yet been signed, according to financial supervisory authority BaFin.
The subsidy for low earners has had hardly any visible effects on the spread of occupational pensions, the report noted, adding that the opting-out clause had not reached small companies.
Only 4% of companies said they used subsidies for low earners introduced with the BRSG, 2% use the opting out clause and 4% pure defined contributions (DC).
However, around a quarter of the pension institutions that took part in the survey for the report stated they already offered pure DC options, or reine Beitragszusagen, or plan to offer them shortly.