The German pension association Arbeitsgemeinschaft für betriebliche Altersversorgung e.V. (ABA) has begun internal consultations in response to the government's revived 2nd Company Pension Strengthening Act — a reform effort previously stalled by coalition collapse but now back on the table.

The joint draft bill was presented on Friday, 25 July, by the Federal Ministry of Labour and Social Affairs (BMAS) and the Federal Ministry of Finance (BMF) for a second Occupational Pensions Act.

The bill, the 2nd Company Pension Strengthening Act, has the same name as a draft bill published in June 2024 by the ‘traffic light’ coalition government, which was adopted by the Federal Cabinet in September that year. However, with the breakdown of the three-party coalition government, it did not progress further.

The new German government has picked up the bill and is offering associations the opportunity to comment on the draft until 8 August 2025. As a result, the ABA confirmed it will participate in the consultation process and discussions in the relevant ABA committees have already begun.

The association is yet to provide any indication of its thoughts on the bill, but previously welcomed the 2024 bill, although it raised concerns that revisions made to the bill fell "short of its expectations".

According to the draft, at the end of 2023, approximately 18.1 million employees subject to social insurance contributions had active occupational pension entitlements with their current employer, an increase of 500,000 employees since 2017.

However, this figure has not increased in line with the rise in employment, with the coverage ratio having fallen to 52 per cent of workers.

“Company pension schemes, as a useful supplement to statutory pension insurance, must therefore be further expanded and strengthened in terms of both quantity and quality. This applies above all to areas where there are still large gaps in coverage, i.e. in smaller companies and among low-income employees,” the bill stated.

The bill aims to increase occupational pension participation in the country whilst keeping the system voluntary. Instead, the government hopes to remove “apparent” obstacles and increase incentives to join such schemes. In particular, it intends to help increase coverage of workers at smaller companies and lower earners by increasing tax incentives and subsidies.

In terms of content, the new draft bill is largely in line with the government draft from September 2024, but there have been changes to several technical details.

For example, improvements being introduced to support low earners have been delayed by two years to 1 January 2027. The previous bill also included plans for a review of whether occupational pension schemes should be made mandatory but this has been dropped.

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