German insurer Talanx and the union Ver.di have successfully concluded negotiations to start the country’s first social partner model for occupational pensions. The financial supervisory authority, BaFin, will have to give the green light for the model to go ahead. Ver.di expects to start implementation on 1 July.
In total 11,000 Talanx employees can sign up for a pure defined contribution (DC) company pension scheme in the future.
The pure DC model, introduced in 2018 through the law to reinforce occupational pensions – Betriebsrentenstärkungsgesetz (BRSG) – reduces guarantees for the employees and frees up employers from liabilities. Employers however have to pay an additional contribution as a safety net for employees.
Fabian von Löbbecke, member of the board responsible for occupational pensions at Talanx, describes the successful end of negotiations as a “breakthrough” for the social partner models in Germany.
“We are setting an example. We can now show the positive aspects of the new model to other interested parties,” he said.
Discussions between Talanx and Ver.di lasted for two years, with the COVID-19 pandemic representing a further obstacle for the new DC model.
“For Ver.di, the negotiations on the first social partner model were a challenge,” said the union’s executive board member, Christoph Schmitz.
“[The aim of the negotiations] was not just about finalising a collective agreement, but also developing a model of company pensions that on the one side lead to higher occupational pension benefits through higher returns, and on the other side also creates security for the employees. We succeeded on this with the deal,” he added.
The security for employees is the result of a new mechanism that forces employers to contribute financially to the pension model.
The pure DC social partner model without employee guarantees represents a radical change in the occupational pension landscape in Germany.
“The pure defined contribution is a new alternative [to the other ways to run occupational pensions], which enables attractive long-term returns despite the persistent low interest rate phase,” said Schmitz.