A majority of German small and medium-sized enterprises (SME) are “sceptical” about pure defined contribution (DC) pension schemes, according to a joint report by Generali Deutschland and F.A.Z. BUSINESS MEDIA.

Their report, Company pension schemes in SMEs, surveyed over 200 HR managers in German SMEs about their attitudes to company pension schemes (bAV). It found that SME employers favour DC plans with minimum benefit (BZML) and the DC defined benefit (DB) plan (BOLZ) over the social partner pure DC model.

Against the backdrop of the German government's current legislative initiative on the Company Pension Strengthening Act II, only 38 per cent of those surveyed agreed that a regulatory opening of the social partner model would significantly increase the demand for pure defined contribution plans in SMEs.

In contrast, the majority of respondents are in favour of guaranteed benefits for occupational pension models, which are primarily intended to support employees with particularly high pension requirements – for example, low earners, part-time employees or young professionals.

The survey found that two-thirds of the companies surveyed consider higher guarantees in occupational pension schemes to be important.

Overall, half of SME employers believe that an attractive occupational pension scheme helps attract and retain junior staff members. They also highly value the inclusion of scheme add-ons, such as survivors' insurance and occupational disability or invalidity insurance.

However, the report highlighted the “increasing reluctance” on the part of employees to participate in a company pension scheme. Small and medium-sized companies with 50-250 employees have particularly seen a decline in participation. Respondents also reported that participation in schemes that do not offer an employer contribution is falling.

Commenting, Generali Deutschland head of occupational pension schemes, Dr Thorsten Fischer, said: "When it comes to attracting and retaining employees, eight out of ten companies in the SME sector rely on company pensions with a financial employer component. Almost as many employers are satisfied with the effect of occupational pension schemes on employee retention.”

"Our study results make it clear that occupational pension schemes are among the most effective HR instruments used by German SMEs."

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