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On 10 February the smaller chamber of the German parliament, the Bundesrat, had recommended amendments to the draft law the government had presented in November. The parliamentary body wanted to allow guarantees to be offered in the new vehicles which the government had intended as pure defined contribution (DC) plans.
In a response to the Bundesrat’s suggestion the government clarified in a written statement that it did not want guarantees: “The pure DC plans are intended as an additional offer for those employer and employee representatives who do not see guarantees as protection but as a limitation to designing a pension plan or a hurdle for entering into an agreement on occupational pensions.”
Further, allowing guarantees in these new plans would give insurers a competitive advantage in the market, it was reasoned.
The government added: “Combining pure defined contribution plans with a non-guarantee rule is therefore only a next step.”
The government emphasised that all those who wanted to have guarantees in their pension plans could still choose an existing vehicle.
The government also rejected proposals by the smaller chamber on exempting parts of the contributions to occupational pension plans from health insurance payments.