Germany. Social partners move forward to implement pure DC plans

German employer and employee representatives are taking the first steps to implement the social partner models for pensions signed up recently, under a new legal framework, with other candidates planning to offer pure defined contribution (DC) schemes.

The investment strategy under the social partner model set up by energy company Uniper with unions is taking shape, with a social partner advisory board – Sozialpartnerbeirat – constituted last week, that has decided on asset class allocation, and the upper limit of the security contribution buffer, said Martin Eisele, senior vice president pension asset and liability management at Uniper, at the Handelsblatt occupational pension forum taking place in Berlin this week.

Union Ver.di is joining the sozialpartnerbeirat, added Judith Kerschbaumer, Ver.di’s head of labour market and social policy department, adding that one of the important reasons why the union decided to sign the new model was its ESG criteria on pension investments.

The Sozialpartnerbeirat is set up by law to implement the social partner model, putting in place a co-decision mechanism on capital investments.

Uniper received approval by the financial supervisory authority BaFin to offer pure DC pension plan (rBZ 1) through the Metzler Sozialpartner Pensionsfonds, after signing an agreement with unions Ver.di and IGBCE, the Employers’ Association of Energy and Water Management Companies (AVEW), and the Employers’ Association of Bavarian Energy Supply Companies (AGV Bayern).

The social partner model for employees at Uniper is financed by the the employer, with deferred compensations and security contribution with an upper limit to fend off possible cut to benefits or market volatility.

Uniper expects to motivate 80% of employees to change to a DC plan, starting a campaign to inform them of the new choice, said Ralf Drewing, senior expert pensions and benefits at Uniper, adding that in January the first deferred compensations could already flow to the new scheme.

Lutz Mühl, managing director economy and social policy at the German Federation of Chemical Employers’ Associations (BAVC), which signed a social partner model with the trade union IGBCE, offering DC plans through the ChemiePensionsfonds (CPF), said the collective bargaining agreement has been designed in a way that other sectors represented in the federation can join in.

The pure DC plans in the chemical sector add to existing options for employees to receive occupational pensions, with a 5% security contribution, Mühl said, and the first deferred compensations could flow to the new scheme in December.

A new design for social partner model?
The Bundesverband der Freien Berufe e. V. (BFB), the association representing professionals, is also considering offering pure DC plans to members.

A social partner model for pensions designed by the association of professionals could look different to one participated by social partners representing employers and employees.

On one side the association of medical specialists – the Verband Medizinischer Fachangestellten – which is also the trade union representing medical professionals, and on the other the Arbeitsgemeinschaft zur Regelung der Arbeitsbedingungen der Arzthelferinnen/Medizinischen Fachangestellten (AAA), that would represent employers in the medical sector, could be the parties in a potential collective bargaining negotiation and agreement, said Peter Klotzki, BFB’s chief executive officer.

The legislator could contribute to making the process of signing a social partner model beyond the traditional mechanism in place by reforming article 24 of the law to strengthen occupational pensions – Betriebsrentenstärkungsgesetz – on collective bargaining agreements signed by parties that are not bound by such agreements, Klotzki said.

According to Klotzki, in a potential social partner model for professionals a company will act as a buy-out vehicle for benefits allowing a variety of products, and choices, for members.

Read More @IPE

259 views