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Pensions directive at risk amid German vote

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GERMANY - Germany could miss the deadline for transposing the directive on occupational pensions if early elections take place, pension experts say.

Last night, Schröder shocked observers by announcing that he would ask Germany’s federal president to dissolve parliament this summer to allow for a new poll. It came after his governing Social Democrat Party was defeated in elections in North Rhine Westphalia.

Prior to the announcement, Germany had been on track in transposing the EU directive – Institutions for Occupational Retirement Provision - by the September 23 deadline. The finance ministry was putting the finishing touches on a draft law that was to be voted on by the German parliament this summer.

But pension experts said that while the Bundestag, or lower house of parliament, would pass the law before being dissolved, the Bundesrat, or upper house, was in no hurry to follow suit amid the new political situation. Schröder’s SPD-Green government controls the Bundestag, while the conservative opposition dominates the Bundesrat.

“What we’re hearing from the finance ministry is that the draft law will be handed to the Bundestag very soon and that that chamber should approve it before the dissolution,” said Klaus Stiefermann, managing director of aba, the German occupational pensions lobby.

“Yet what the Bundesrat will do is an open question. Given that new elections coincide with the planned transposition of the EU directive, it’s likely to wait to see whether a new government emerges,” Stiefermann told IPE.

He added that it was even possible that a new conservative-led government would change the finance ministry’s draft law.

The draft law permits Pensionskassen, the traditional corporate pensions vehicle and Pensionsfonds, the newer equity-oriented one, to operate in the EU, though they will continue to be regulated by Germany’s BaFin.

Pensionskassen will continue to be treated as insurance vehicles and as such, face investment restrictions, namely a 35% cap on equity holdings and a 5% cap on hedge fund holdings.

However, the ministry has still not decided whether to strengthen the competitiveness of Pensionsfonds by allowing them to easier access to corporate pension assets held by the Direktzusage (book reserves). These assets account for 60% of the €367bn total.

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