Lufthansa’s German pilots are opposing the airline’s defined contribution (DC) pension plan, demanding higher employer contributions as investment returns fail to secure adequate retirement benefits.
A spokesperson for Vereinigung Cockpit, the association representing the pilots, told IPE that Lufthansa must raise the monthly payments it makes into the occupational pension scheme. The association said Lufthansa has resisted improving occupational pensions during several rounds of negotiations.
“Instead of constructive solutions, [Lufthansa] presented only models at the expense of employees. Substantial improvements were not offered,” said Andreas Pinheiro, president of Vereinigung Cockpit, in a statement.
According to Pinheiro, Lufthansa has cited “financing limitations” to justify its stance. The airline said it would continue to pursue a solution at the negotiating table but declined to comment on the details of the talks.
In 2017, Lufthansa replaced its previous pension system, which included contribution guarantees, with a capital market-based model. According to Vereinigung Cockpit, this has led to a significant reduction in benefit levels.
“Pilots will receive a lower pension compared to their colleagues in the old system, because of the returns [achieved by the capital market-oriented plan],” the spokesperson for Vereinigung Cockpit said.
The conflict highlights broader obstacles to shifting Germany towards a DC system.
Actuaries have proposed further reducing guarantees in occupational pensions, both during accumulation and decumulation, while boosting allocations to private markets.
The Institute of Pension Actuaries (IVS) is calling for the statutory minimum guarantee in DC plans with a minimum benefit – Beitragszusage mit Mindestleistung – to be cut to 60% of contributions paid.
Combined with higher exposure to private markets, such plans would deliver long-term returns above inflation while retaining a basic guarantee, the IVS argued.
“Higher risks are attached to private market investments. It must be possible to at least partially pass on fluctuations in terms of performance to the beneficiaries. You can’t invest in private markets and at the same time demand a high level of guarantees; it won’t work,” said IVS chair Stefan Oecking during a webinar on pension reforms this week.
Nicola Döring, deputy chair of IVS, added that a fund-based investment solution with fewer regulatory restrictions could achieve higher returns without changing existing rules for occupational pension vehicles.
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