Germany’s Arbeitsgemeinschaft für betriebliche Altersversorgung (aba) has called for a “dual-core” pension system built around a stronger combination of statutory and occupational provision, arguing that the recently passed Pension Provision Reform Act (BRSG II) “falls short”.

Speaking at aba’s annual conference in Berlin today, 12 May, its chair of the Executive Board, Beate Petry, criticised the government for not using occupational pensions “consistently” for old-age provision, unlike in other countries.

“A pension system must be developed with a dual core of statutory and occupational pensions. This must be the top priority, as it is abroad as well,” she argued.

In Petry’s view, the BRSG II contains important steps but still falls short of what would be needed to deliver a significant boost to occupational pensions.

“We urgently need further improvements in support for low-income earners, better return opportunities across all types of pension promises – meaning a reduction in 100 per cent guarantees, up to and including the option to waive guarantees.

“Social partner models must become more easily accessible, and sustainable deregulation has long been overdue. In addition, we need fewer reporting obligations and more flexibility in labour law, because pension systems must be able to adapt more easily to changing conditions,” Petry stressed.

She also criticised the recent reforms to private pension provision in the country, as she believes that the strong focus on exchange-traded fund (ETF)-based saving and the move away from the model of lifelong benefits creates the wrong incentives and shifts risks into the payout phase.

“The law does not promote sustainable retirement provision, but rather wealth accumulation – a kind of temporary consumption financing,” she said.

Petry also warned that the broader system could be distorted if subsidies and political messaging encourage the perception that short-term wealth accumulation is equivalent to retirement provision, arguing that this risks undermining confidence in collective, long-term occupational pension schemes.

“The redesign of the framework for subsidising private pension provision will sustainably damage occupational pensions,” she said.

For upcoming reforms, Petry called for a cross-pillar perspective – with a clear direction towards more funded, practical and collectively organised provision.

“Occupational pensions must take precedence over wealth accumulation with time-limited payout plans,” she said.

She was particularly critical of the idea of a mandatory scheme, warning that requiring employers to make additional contributions on top of wages would effectively increase non-wage labour costs.

She noted that this would also impact around half of employers that do not currently offer any occupational pension provision.

Given the current strained economic environment, she said such a move would be problematic. Petry also warned that mandatory schemes could quickly become bureaucratic burdens, introducing additional information requirements and new liability risks for employers.

She argued that if mandatory elements are considered, they must be accompanied by liability-free, easy-to-administer solutions, and a broader assessment of whether existing occupational pension instruments should first be made more effective and simpler.

At a European level, Petry called for a more critical perspective, as she argued that many European Commission initiatives risk overloading occupational pensions with additional regulation rather than promoting their expansion and efficiency.

“This comprehensive regulatory programme, presented in the so-called pension package, runs counter to the goal of ‘less bureaucracy’ and the promotion of occupational pensions.”

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