The German government has produced a draft bill for a second law to strengthen company pension schemes, including an independent quota of 5 per cent for infrastructure investments.

The bill, known as the 2nd Company Pension Strengthening Act, is linked to the Infrastructure Promotion Act, a discussion draft around renewable energy and infrastructure investments by funds. The provision around infrastructure investment is said to have been a suggestion from the pensions associations aba, ABV, and AKA, and applies to both equity and debt instruments.

According to the Bundesverband Alternative Investments (BAI), this most-recent draft contains important changes to fund supervisory law (KAGB) regarding infrastructure investments, as well as improvements to the Investment Tax Act.

BAI’s managing director Frank Dornseifer said: "The BAI has repeatedly pointed out that the sustainable transformation or energy transition cannot be financed without the fund industry and the institutional and private investors behind it. In its Climate Barometer 2023, KfW puts the financing required to achieve the legally enshrined goal of climate neutrality in Germany by 2045 at around €5tr, which corresponds to an average annual investment requirement of a good €190bn, whereby the largest share cannot be borne by the public sector.”

He added: “The legislative initiatives that have now been presented address precisely the areas of action that we have been addressing and, overall, they are therefore to be viewed positively. Not only will legal certainty be created along the investment value chain in the future, but above all long-standing inconsistencies in supervisory and tax law, which have damaged the competitiveness of Germany as a fund location, will be eliminated.”

Others were more critical. The German office of WTW released a statement saying that it was ‘regrettable’ that the draft legislation had not implemented oft-requested adjustments. It also said that there had been no ‘real promotion’ of classic company pension schemes.

WTW said: “Future legislative improvements will also be necessary on this point in order to improve the framework conditions for company pension schemes in their full breadth and thus also to make the advantages of classic company pension schemes even more usable for practice in the further dissemination of company pension schemes.”

Even with that said, WTW did offer some support. It said that the improvements to the social model are positive while highlighting the work done to alleviate low-income support.

It wrote: “Already today (as of 2022), more than 94,000 employers with annual contributions totalling around €700m are taking advantage of this option of subsidised employer-financed company pension schemes for their employees. The changes in this area have the potential to once again bring a clear push towards this element of promoting precisely those employees, which was introduced for the first time by the BRSG, for whom deferred compensation is often not financially possible.”

A number of associations have been asked to return with comments on the draft bill by 25 July.

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