GERMANY – The recent collective bargaining contracts between the metal and chemical workers’ industry associations and their respective trade unions signal the beginning of a trend that is helping to reshape the German pension fund industry, says Klaus Stiefermann, general manager of the German Pension Fund Association, the Heidelberg-based Arbeitsgemeinschaft für Betriebliche Altersversorgung (aba).
According t o Stiefermann, the recent pension reforms in Germany mean a more open market, in which people will have a wider choice of occupational and private pension schemes. “Occupational schemes in the last decade have not featured on the agenda of collective bargaining discussions, but they have now become topical as we react to the fact that the former sponsored retirement savings vehicles, the Pensionskassen, are no longer enough,” says Stiefermann.
He points out that the industry is being driven by government reforms to allow companies to build up their own capital funded pensions.
In addition to the metal and chemical industries, Stiefermann points out how other market sectors are moving in the same direction. “We have heard some noise in the construction industry and merchandising sector too,” he says. He adds that he expects to see the concept spread throughout most industry sectors across Germany and this involves countless millions of workers.
But the new deals don’t just apply to large companies, as the collective nature of the concept means smaller companies may also benefit. “What is different here is that the new contracts deal with branches of industry, not individual companies, so they are open to any firm operating in that sector,” comments Stiefermann, adding that the recommendations of the contracts will especially help smaller companies decide on the most cost-effective and suitable form of retirement provision to go for.
Stiefermann stresses that the new arrangements won’t necessarily take the form of a traditional pension fund and are not designed to replace any existing retirement provision vehicles, though the long term influence of a more open market is food for thought. “The pensions debate is highly topical in Germany at the moment and we do not know yet the direction the industry is going in, but these new developments, though not without their problems, are a positive signal. We know the German ‘pension fund’ is coming, though we don’t know what it looks like yet. But at least we now have variety.”