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Under the proposal, the government could reimburse as much as 30% of SMEs’ expenses and contributions for setting up an employer-financed pension plan. Additionally, pension plans for people with lower incomes could be subsidised.
These are two details that have surfaced on government plans to introduce industry-wide pension plans – a full draft is expected to be presented around the end of October.
The debate over pensions had been postponed last year to prioritise the implementation of the EU’s Portability Directive and await the results of government-commissioned studies into the German pension system.
Paul Jasper, retirement head for Western Europe at Willis Towers Watson, said the subsidies were “the right proposal and an important one to create an incentive for both these groups”. Another disputed feature of the awaited government proposal could be an “opting out”. Jasper confirmed that this idea was on the table, adding that “it makes sense”.
But he also pointed to legal uncertainties regarding opting-out models that would have to be clarified.
One possible conflict might be that, under German law, workers must be free to decide how to use their income – current regulations on deferred compensations are also based on voluntary transfers.
Various experts at an event organised by German think tank the Pensions Akademie also welcomed the subsidy proposal.
Its panel also proposed the introduction of ‘defined ambition’ plans in Germany, where a target pension payout is set without guarantees.