GERMANY - The German province of Saxony-Anhalt has passed a law on the creation of a pension fund for civil servants. In neighbouring Lower Saxony the same idea brought forward by the Social Democrats found support among the unions.

From 2007 pension benefits of new employed civil servants will be paid into the fund. However, Saxony-Anhalt also wants to make additional annual payments to the fund to step-by-step also cover already accrued pension rights, a spokesman for the province's finance ministry told IPE.

Next year the province will pay €20m into the fund with similar commitments made for the following years. "We will have an actuarial evaluation on how much money is needed and the ministry will set down the amount of the additional payment annually", the spokesman said.

The fund will be run by trustees to ensure its existence in times of political change. No decision has been made yet on the make-up of the portfolio.

The province's finance ministry estimates that the number of civil servants covered under the pension scheme will increase almost five times to 10,200 by 2020. That means that pension obligations for the province will rise from €76m in 2007 to €291m annually by 2020. First payments from the fund are to be made in 2016.

Meanwhile in Lower Saxony, unions have expressed their approval of setting up a pension fund for civil servants "in principle". "The SPD's question on the pension fund issue was put to the local government," a spokesman for the government of Lower Saxony confirmed to IPE. "It will be answered in a parliamentary session on Friday." 

Lower Saxony would be the eighth of the 16 German provinces to set up a pension fund for its civil servants. Most recently, Bavaria decided for a funded option in July of this year. Other provinces include: Rhineland-Palatinate (since 1996), Saxony, Northrhine-Westphalia, Hesse, Hamburg and Bremen.