Germany’s Arbeitsgemeinschaft für betriebliche Altersversorgung (ABA) has called for the recommendations of the German Pension Commission to serve as the starting point for a cross-pillar overall concept for old-age provision.

Speaking at its Supervisory Law for IORPs symposium in Bonn, the ABA stressed the importance of considering the interactions between statutory, occupational and private pension schemes.

The German Pension Commission is focused on making pensions sustainable and has proposed 33 reforms to the German pension system including changes to retirement age, changes to early retirement and a new state-run pension fund modelled on Sweden’s.

ABA deputy chairman of the Board of Directors and Association of Pension Funds head, Dirk Jargstorff, said: “The recommendations of the German Pension Commission address important issues across all three pillars of pension provision. What has been missing so far, however, is a view of how they interact.”

In particular, he said, consideration must be given to the impact that the introduction of a statutory capital pension would have on existing occupational and private pension schemes.

From the ABA’s perspective, a new statutory capital pension must not be considered in isolation, as additional pension contributions do not affect employers and employees in a vacuum.

Given this, ABA argued that the legislator must consider the overall burden and financing scope.

If a statutory capital pension is to be introduced while at the same time strengthening occupational schemes, the association said the economic framework conditions for employers must be improved and, above all, non-wage labour costs must not rise any further.

It also argued that occupational schemes should be considered when designing the statutory lump-sum pension.

To this end, in its submission to the Pension Commission, the ABA proposed crediting of existing occupational pension contributions and collective opt-out as concepts for discussion.

The first suggested that contributions already made to occupational schemes could be credited against future contribution obligations for the statutory capital pension, allowing for a greater focus on areas where there is a genuine need for further social policy action.

Meanwhile, the collective opt-out proposal would establish a collective agreement with an opt-out clause, allowing sectors with robust occupational pension schemes to be exempt from the statutory capital pension scheme.

“Occupational pension schemes can and do want to play a central role in the further expansion of funded pension provision. To do so, however, they require a reliable and appropriate regulatory framework,” Jargstorf said.

He said that this was also applicable to the further development of the IORP II Directive.

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