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IPE special report May 2018

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Southwest Germany sets up pension fund

GERMANY - The province of Baden-Württemberg has announced it will establish a pension fund for its civil servants.

Günther Oettinger, head of the regional government, said thanks to better financial management the province should be debt-free from next year.

One additional step to help reduce government spending will be to set up a pension fund for civil servants.

A spokesman for the province's finance ministry explained to IPE although the measure has already been agreed on by the coalition a detailed plan has yet to be negotiated.

Baden-Württemberg currently has around 180,000 civil servants. However, it is likely the province will follow the example of other parts of Germany where a funded pension provision was only established for new employment contracts.

Baden-Württemberg is the eighth province to set up a pension fund in order to stem the tide of future pension obligations threatening the budget. Most recently, Saxony-Anhalt passed a law in November on the creation of a pension fund for civil servants.

Other provinces - from a total of 16 - with funded pension provisions for civil servants include Rhineland-Palatine, which in 1996 was the first to take this step, Saxony, Northrhine-Westphalia, Hesse, Hamburg and Bremen.

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