Pensions have moved into the focus of the political discussions in Berlin. Before the end of this legislative term, draft laws on the “reinforcement” of legal pensions and the “confidence-building” towards occupational and private pensions are planned. Via an “Act to Reinforce Company Pensions”, a new structure of company pensions is possible to be introduced. On this topic, expertise has recently been carried out for BMF and BMAS. The main issue is to put a stronger responsibility on the social partners to design or at least support pension entitlements. The corresponding “social partner model” provides that the social partners choose both the benefits solution and the associated pension provider (pension fund, pension plans or direct insurance) and that this choice may become universally binding within the scope of the collective agreement, also for all employers and employees not bound by a collective agreement. The background to this is the intention of the Federal Government to push the nationwide dissemination of company pension schemes, especially in small and medium-sized companies. In agreement with this, also the “opting out,” which has been supported by Lurse for years and is now called “option model,” is being discussed: the automatic inclusion of all employees into company pension schemes with the possibility of objection. Thus, the employer’s liability risk is meant to be eliminated. By a purely “defined contribution commitment,” the employer is completely exempt from obligations after the payment of contribution (“pay and forget”). The proposal of an expert during the annual aba meeting even goes so far as to refrain totally from guarantees, offering the employees the greatest possible chance of the capital markets; just the prospect of a non-binding “target pension,” also called “defined ambition plan,” should be stated by the provider. As far as the commitment still contains guarantees, the selected provider has to fulfill them; however, loss protection through existing security systems (protector or pension protection fund) should be established. To what extent existing pension schemes should be transferred into the new system is supposed to be left to the discretion of the social partners.
In parallel, fiscal supports are also under consideration. However, they are supposed to turn out mostly without any extra cost for the tax authorities: an employer’s obligation for subsidies for new commitments to compensate for the – unchanged – full insurance contribution for pensions, a deduction amount in the tax balance for businesses with less than 20 employees with an effect on liquidity due to tax deferral, and an improved Riester subsidy in occupational pension schemes due to the abolition of the double insurance contribution or by a new amount of the subsidy.
The discussion of the draft law will take place within the next few months among the entire Federal Government; a result is not expected before the end of the year.
Lurse’s recommendation: It remains to be seen for which course the Federal Government will opt. We consider it reasonable in any case to bring the social partners in and determine what responsibility they are willing to carry. From our point of view, the possibility to transfer existing pension funds after the establishment of the social partner model would have to be verified under constitutional law. We find it worth considering the possibility of a purely defined contribution commitment without guarantees; given the continuing period of low-interest rates, a sustainable capital cover otherwise would no longer sufficiently function. Lurse already offers an appropriate model which allows the company to determine to what extent contributions are invested in special funds instead of classic insurance solutions.
If you are interested or have any questions, please contact Dr. Carsten Schmidt
(Phone: +49 (0) 69 6783060-35, Mail: firstname.lastname@example.org).