Germany’s occupational pensions industry is calling for broader use of automatic enrolment as a means to reinvigorate growth in second pillar provision, amid concerns that progress has stalled in recent years.
Speaking at aba’s annual conference in Berlin this week, Heinke Conrads, board member at Allianz Lebensversicherung, said the insurer’s large corporate clients were already successfully implementing opt-out mechanisms.
“We can say that opting out works; therefore, my plea: let’s make opting out easy, for all companies, not only for companies bound by collective bargaining agreements,” she added.
Currently, auto-enrolment in occupational pension schemes is only available in Germany through collective bargaining agreements, primarily via deferred compensation arrangements.
Conrads noted that although occupational pension coverage has expanded over the past two decades, the rate of growth has lagged behind the increase in the number of employees subject to social insurance contributions in recent years.
The call for reform comes as the industry looks to revive momentum, with discussions once again centring on proposals put forward in the previous legislative period, which included the introduction of mandatory defined contribution (DC) plans if voluntary take-up failed to gain sufficient traction.
Figures presented at the event by research agency Verian showed little change in recent years. The number of employees with at least one occupational pension entitlement fell slightly from 21 million in 2021 to 20.9 million in 2023, while the number without multiple entitlements decreased from 18.4 million to 18.1 million over the same period.
Claudia Picker, deputy chair of aba, also endorsed the use of opt-out mechanisms, suggesting that re-enrolment at regular intervals could help reinforce participation.
She referred to a proposal by Marlene Haupt, professor of economics and social policy at the University of Applied Sciences Ravensburg-Weingarten, who advocated for auto-enrolment anchored to re-enrolment cycles, as well as a state-sponsored default fund to encourage participation among small and medium-sized enterprises, with features such as default contributions, portability, and targeted support for low earners.
Markus Hofmann, head of social policy at the German Trade Union Confederation (DGB), echoed the need for stronger measures, arguing that binding elements were essential for success.
He said that voluntary systems or matching models have limits, and they tend to benefit only those with financial knowledge or sufficient means.
DGB supports the introduction of mandatory schemes, provided they include clear standards and rules on contribution-sharing between employers and employees.
Hofmann also emphasised the importance of education around the risks and benefits of occupational pensions.
However, employer groups remain cautious. Christian Gleimann, chair of the occupational pensions committee at the Confederation of German Employers’ Associations (BDA), warned that auto-enrolment could be “too far-reaching”, infringing on employee choice and proving difficult to implement in practice.
Gleimann also questioned whether such a measure would succeed in extending coverage to groups with historically low pension participation, including the long-term unemployed, low earners and the self-employed.
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