GERMANY - The Association of company pension schemes in Germany, VFPK, wants to see more tax incentives encouraging employees to contribute to retirement plans.

The association has called on the government to change regulations under which people effectively pay a double layer of taxes, in situations where the state-subsidised third-pillar Riester plan is invested via a pensionskasse.

Peter Hadasch, chairman of VFPK, argued the government should deliver social tax benefits on the contributions as well as on the pension benefit received after retirement, argued, and further demanded there should be an increase in the amount of salary which can be transferred straight into a pension plan without paying tax. (See earlier IPE story: Experts criticise social tax exemption)

He added the tax relief in special situations, such as that applied to the housing Riester, served "no real purpose".

He claimed this was esepcially important as he believes interest in occupational pension provision is set to rise in Germany, quoting a JP Morgan study released at the end of last year. (See earlier IPE story: 75% of Germans consider occupational pensions safe)

In it, the study found 80% of the 141 companies questioned believe occupational pensions will play a bigger role in HR policies in future while 58% said they thought pension schemes will become a part of salary packages in more companies.

Hadasch suggested the insurance-like form of a German pensionskasse was especially tailored to the demands of employees in terms of transparency.

"The pensionskasse model is a pioneer in this field because of its construction is similar to a mutual insurance society, in that both employees and employers have a say in the running of the fund, and together their representatives make up at least 50% of the top boards," said Hadasch.

He claimed this model of cooperation increased acceptance and appreciation of the system.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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