Status: 27.12.2022 06:40 a.m
The first companies introduce the so-called social partner model. Employees lose their entitlement to a guaranteed pension. In return, their chances of a more lavish return in old age increase.
At first glance, the interest is extremely low: Of the 1,900 companies that the Federal Chemical Employers’ Association (BAVC) wrote to, only 50 had decided in favor of the new “Nahles pension” by the beginning of December. A rate of 2.6 percent. Nevertheless, Klaus-Peter Stiller, general manager of the association, is anything but disappointed. After all, the companies currently have other concerns in the energy crisis than adjusting their pension systems. “In this respect, the 50 companies that have said yes so far are a very good result from our point of view.”
Stiller is optimistic that significantly more companies will adopt the new model in the future: “It will prevail because it has to. Otherwise we will no longer be able to offer attractive company pension schemes in the long run.” The head of the association indirectly alludes to the financial risks that companies have had to take with their pension obligations so far. The new social partner model, on the other hand, is intended to ensure greater predictability.
Farewell to guaranteed pension levels
When the then Federal Labor Minister Andrea Nahles presented the model she had initiated in the Bundestag in 2017, she already knew that it would not be easy to convince employees and trade unions in particular. The new company pension was “a real communicative challenge,” said the SPD politician at the time. Nahles accused critics who spoke of a poker or gambler’s pension of “irresponsible propaganda”. The Company Pension Strengthening Act finally came into force on January 1, 2018.
The core of the “Nahles pension” is the move away from the so-called benefit commitment. So far, employers have always had to guarantee their employees a certain amount of pension. In order to keep this promise, they invested the contributions they paid in conservatively, often in low-risk government bonds. If there was a deficit in the pension fund, the employer had to add money.
More focus on the stock market
In the case of the social partner model, the employer no longer guarantees a specific pension amount, but makes a contribution commitment. He only guarantees that he will pay a certain amount into the pension fund every month. The money can then be invested more risky, for example in shares. How high the company pension is afterwards depends on the long-term development on the financial markets. In the payment phase, the monthly amount can fluctuate.
For employers, the advantage over the classic company pension is obvious: “I don’t have to reckon with having to add something at some point in the course of a guarantee and possibly falling interest rates again, rising inflation,” says Klaus-Peter Stiller. However, the term gambler’s pension is nonsense. “There is no gambling here, but money is invested very responsibly with the participation of the social partners, i.e. the union.”
Nahles pension only with collective agreement
A prerequisite for the new model is a collective agreement between employers and trade unions. So far, only companies bound by collective bargaining agreements have been able to introduce the “Nahles pension”. Just like at the turn of the year the now nationalized energy company Uniper, which, apart from the Association of the Chemical Industry, is one of the first in Germany. ver.di and the industrial union IGBCE negotiated the new social partner model.
For Judith Kerschbaumer, Head of Social and Labor Market Policy at ver.di, it was important that Uniper employees were not given a worse alternative. “That means people can decide for themselves: Do I use the new model, yes or no,” she says. Those who decide against this can, as before, pay into the classic company pension with a defined benefit obligation.
Trade unions have a say in investing
In the new model, Uniper pays employees a basic contribution of two percent of their gross annual salary. There is also a so-called matching contribution and a security contribution of seven percent of the contributions made. The security contribution is intended to compensate for market fluctuations. The money goes into a pension fund that runs through the private bank Metzler and invests in stocks, bonds, real estate and gold.
“I take a little more risk, although the risk is limited by a social partner advisory board. Both employees and employers sit on the advisory board, who manage and control the capital investment,” explains Kerschbaumer. “In our opinion, the model will definitely pay off over the long term, especially for younger employees.”
Younger people can hope for a higher pension
The economist Olaf Stotz from the Frankfurt School of Finance and Management calculated how high the returns can be. He confirms the ver.di statement, according to which young employees in particular benefited. “Expressed in numbers, that can certainly add up to 50 percent more pension,” says Stotz. The scientist explains this using two case studies: First, a 35-year-old employee who works until the age of 67 and pays 100 euros into a company pension every month.
If the woman opts for the social partner model – in this case with a share quota of 100 percent – then in the best case scenario she will later receive a monthly company pension of 208 euros, adjusted for inflation. With the classic performance commitment, it would only be 129 euros. In the middle scenario, she would receive 151 euros (94 euros for a classic company pension), in the worst case 79 euros (compared to 58 euros). “With younger employees, the risk is hardly noticeable because the chances of return, for example with shares, are much higher and more decisive in the long term,” Stotz sums up.
Older people need to weigh the risk
It looks a bit riskier for a 55-year-old employee who will continue to pay in 100 euros every month for twelve years. The shorter the savings phase, the less often it can balance out fluctuations on the financial markets. In the best case, the company pensioner receives 50 euros with the social partner model, compared to 38 euros with the classic performance guarantee.
In the middle scenario it is 42 euros (compared to 36 euros) and in the worst case he only gets 29 euros with the “Nahles pension” compared to 33 euros with the classic model. “In short: The new Nahles model is also very attractive for older employees,” says Stotz, but perhaps not for people who are very risk-averse.
Number of entitlements slightly declining
The next few years will have to show whether the new model can also arouse new interest in company pensions in Germany. The distribution rate in Germany has fallen slightly since 2015. According to the latest survey from the 2020 old-age security report, 53.9 percent of employees in Germany will later receive a company pension.
That’s not enough for the federal government. That is why she wants to further strengthen company pensions in Germany and explicitly refers to the social partner model in the coalition agreement. Since the beginning of 2018, however, no more than ten providers have reported to the financial supervisory authority BaFin who want to introduce the new “Nahles pension”. The two offers from Uniper and the chemical industry are already included.