The German Association of Actuaries (DAV) and the Institute of Actuarial Experts (IVS) have hailed the recommendations made by the country’s Pension Security Commission as a “significant step” toward creating a sustainable retirement system but called for “greater clarity”.

In response to the proposals, the two organisations said further clarity was needed on the overall pension target, stronger support for occupational pensions, and an effective and efficient design of the proposed funded pension scheme.

While they described the commission’s proposal to define, for the first time, an overall retirement income target as an “ambitious objective” for Germany's three-pillar pension system, they cautioned that transparency over an individual's current pension position is not sufficient on its own.

Commenting, DAV chair, Susanna Adelhardt, said: "The recommended net replacement rate of 70 per cent across all three pension pillars is a significant step because it establishes a clear objective. However, from our perspective, it should be regarded only as the minimum level required to maintain living standards in retirement."

She also called for greater clarity on how much each of the three pillars – the statutory pension, occupational pensions and private retirement provision – should contribute towards achieving the overall target.

Adelhardt stressed that this requires a reliable and consistent data foundation, together with realistic assumptions, to ensure the long-term stability of Germany's three-pillar pension system.

DAV and IVS also broadly welcomed the proposal to establish a social partner dialogue aimed at strengthening occupational pensions.

However, IVS chair, Stefan Oecking, said that if occupational pensions are to become more widespread, particularly among small and medium-sized enterprises (SMEs), straightforward solutions that do not depend on collective bargaining agreements are needed.

He argued that employers should have no obligations beyond paying contributions.
"The discussion must not be limited exclusively to social partner models," Oecking said. "It should remain open to different occupational pension arrangements and models, including those suitable for companies that are not covered by collective agreements."

He added that proven occupational pension structures and actuarial expertise should be incorporated into the debate to develop practical solutions. Oecking also said that stable regulatory conditions, economic growth and productivity improvements would be essential to expand occupational pensions further and should form part of the dialogue.

Furthermore, the two organisations welcomed the proposed introduction of a funded pension component within the statutory pension system, saying it would allow workers to build additional retirement savings without reducing benefits from existing funded pension arrangements.

Adelhardt said the scheme's success would depend on a long-term investment strategy focused on achieving returns, together with mechanisms for collective risk-sharing.

"That applies not only during the accumulation phase but also during retirement," she said. "It must also be clarified how the accumulated capital will be converted into a lifelong pension. This is a key actuarial issue on which we would be pleased to contribute our independent professional expertise."

However, DAV and IVS warned that implementing the funded pension would involve significant administrative and technical challenges. Maintaining individual pension accounts would require new systems that would be costly and time-consuming to develop.

Instead, the organisations suggest using existing systems already established for occupational and private pensions as a more efficient alternative, both for administration and for enabling collective risk-sharing during the accumulation and retirement phases.

DAV and IVS said they stand ready to support the legislative process with their technical expertise and will publish more detailed proposals in a forthcoming position paper. They also offered to engage in a constructive dialogue with the relevant ministries and institutions.

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