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Committees advising the Bundesrat – the parliamentary chamber in which Germany’s federal states are represented – said that direct insurance pension providers (Direktversicherungen) should be allowed to offer full or partial guarantees. The government has proposed allowing industries with collective bargaining agreements to run defined contribution pension schemes, without any guaranteed benefits being allowed.
The committees argued that a complete ban on guarantees was not necessary for this type of pension provision and that it would limit the collective bargaining partners’ or companies’ room for manoeuvre.
However, the VFPK rejected this suggestion, saying it would disadvantage both Pensionfonds and Pensionskassen by cutting the link between guarantees and employer liability.
The recommendation is one of several that were made by committees advising the Bundesrat, which will debate the government’s second pillar pension reform proposal – the Betriebsrentenstärkungsgesetz (BRSG).
VFPK said the Bundesrat committees’ recommendation would mean that life insurers and open market pension funds (typically run by life insurers) would be the only providers entitled to offer pensions with guarantees, which would mean occupational pension provision would “once again be left to agents and brokers”.
This, said the association, would be a “fatal” development to the detriment of savers.
The Bundesrat committees also argued that prohibiting direct insurance pension providers from offering guarantees would hinder the provision of disability and widower benefits. The VFPK rejected this argument.
The insurance industry’s representative association, the GDV, lobbied against a blanket ban on guarantees in the new pension plans. The government ignored the GDV’s wish, however. Several other stakeholders also felt their views had been dismissed.