On 27 June, the German Ministry of Labour and Social Affairs published a draft bill of the second law to strengthen occupational pensions, which marks a significant step in fulfilling the coalition agreement’s promise of strengthening the second pillar. The draft’s publication was preceded by an intensive “expert dialogue” that started in the autumn of 2022, in which the relevant German stakeholders in occupational pensions (including ABA) were involved, providing over 300 pages of input combined.

Even though ABA had hoped for a somewhat more ambitious draft, we were, all-in-all, satisfied with the proposed legislative changes – especially given that Germany’s current budgetary constraints prevent cost-intensive reforms such as higher subsidies for employers contributing to the pension plans of their low-income employees.

For example, the draft provides for facilitating auto-enrolment at company level and improving the conditions for access to collective DC schemes (so-called social partner models) for employers not bound by collective agreements. Hence, if it passes through the legislative process without deteriorations (and ideally one or another improvement), the bill has the potential to substantially strengthen the second pillar in Germany, thereby letting more people benefit from an adequate and reliable occupational pension.

Meanwhile, at a European Union (EU) level, in preparation for this legislative period, discussions on funded pensions have recently intensified, especially in the context of the envisioned further development of the Capital Markets Union. However, many of the ideas and proposals brought forward do not pay sufficient attention to the fact that there is no common ‘pension culture’ among the EU member states and, as a consequence, the pension landscape of the EU is very heterogenous, for example with regard to the size and function of the individual pillars.

Pension policy rightly remains a national competence as the member states have, over time, developed extensive legal frameworks encompassing, in particular, social, labour and tax law on funded pensions that fit the respective national context.

The Pan-European Personal Pension Product (PEPP) lacking success indicates that there is neither supply nor demand for pension products developed at EU level. Instead of investing time and resources into the PEPP’s overhaul or even trying to develop a Pan-European Occupational Pension Product, which has recently been discussed by EIOPA’s stakeholder group OPSG, European policymakers should primarily aim at identifying common goals on old-age provision among member states and fostering the exchange of experience and best practice among them instead of trying to find one-size-fits-all solutions. A positive example of this are the efforts at European level to help member states establish national pension tracking systems.


The work-intensive process that resulted in the issuing of the accomplished draft bill of the second law to strengthen occupational pensions in Germany shows that occupational pensions are so complex and entwined with national labour, social and tax law that adequate pension policy can only be designed and implemented at the national level. While we agree with the idea of formulating common pension policy goals within the framework of the European Pillar of Social Rights and the minimum harmonisation approach of the IORP II directive, we don’t believe that granting Brussels more competence for pension policy will benefit EU citizens.

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