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German SMEs reluctant to offer pensions

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  • German SMEs reluctant to offer pensions

GERMANY - Over 60% of companies currently not offering their employees any pension schemes are not planning to do so ever, the German insurance group Ergo has said.

In interviews with over 3,000 German companies with fewer than 500 employees, as well as 1,500 individual workers, Ergo found that despite tax advantages 62% of the companies without pension schemes are "definitely not" planning to introduce any in the future.

On the other hand, only 29% of the polled workers are members of an occupational pension scheme, although 60% are being offered one by their employer.

The main problem was lack of information, as also found in previous studies, as 85% of the polled workers were not aware of their legal right to demand a pension plan to divert parts of their salaries into.

However, every other young employee said they wanted to join a scheme over the medium or long term.

The survey also showed that in total only 37% of the small and medium enterprises are offering pension plans.

A more detailed look shows that 75% of the companies with over 100 employees have a pension plan while only 25% of companies with under four employees do.

The poll confirms that those employees with an occupational pension plan are glad to have it.
 
By far the approach chosen most often for pension schemes is the Direktversicherung (direct insurance), where the employer signs a contract with an insurance company which in turn offers his employees insurance contracts on favourable terms.

In total, 44% of polled companies said they had chosen this approach, while 39% had created a Pensionskasse or joined one, 11% each had set up a Pensionsfonds or a Unterstützungskasse (support fund), an outsourced funded vehicle.

The rest of the companies retain book reserves for their pension liabilities.

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