PowerCo, a subsidiary of German car maker Volkswagen, which specialises on developing batteries for electric vehicles, has chosen a consortium formed by MetallRente, the pension scheme of the social partners IG Metall and Gesamtmetall, and Allianz to introduce a defined contribution (DC) pension plan.

The move came as a result of an analysis of the pensions market, partners and products, as PowerCo pondered on the level of guarantee on contributions paid, and its investment strategy together with the social partners, said Christoph Behrens Malmin, head of labour law and HR compliance at PowerCo, while speaking at an event organised by the German occupational pension association Aba this week.

He said PowerCo had “thought about all possible options” for the implementation of an occupational pension plan, direct promise (Diektzusage), contractual trust arrangement (CTA), a social partner model. “All you can find on the market,” he said, adding that the result was a compromise.

PowerCo, a young company established just two years ago, wanted to find a partner that could offer a plan for decades, with the possibility of “maximal relief” from workload for its HR department, as data are transferred through a payroll provider interface, added Thorsten Teichmann, managing director of Aon Pensions Insurance Broker in Germany, during the event.

Aon worked with PowerCo to set up a DC pension plan offering an 80% guarantee on the amount of contributions paid, which is a mix of direct insurance (Direktversicherung) and support fund (Unterstützungskasse).

The plan lays on these building bocks typically considered at group level by Volkswagen: occupational and collective agreement regulation, and the optional deferred compensation, according to a firm’s presentation.

“Very important was the topic of a lean administration to fairly quickly set a plan, with a [digital] portal, and attract the first employees, with external support,” Behrens Malmin explained.

Flexibility and portability also played a role in choosing the plan, as well as the separation between pension and risk benefits, he added.

The pension plan is designed to attract employees in a tight market where there is a shortage of skilled workers and experts especially in the field of batteries for electric vehicles, said Behrens Malmin.

Looking for IPE’s latest magazine? Read the digital edition here