Supplementary company pension plans: gaps cannot be closed

In view of these findings, the researchers advise: "A uniform and comprehensive solution to the problem of foreseeable differences in old-age provision should first and foremost consist of a return to public pension insurance that safeguards the standard of living and protects against poverty."Only if this is not politically feasible do the experts believe it would make sense to accelerate the expansion of company pension plans.

In large companies, the company pension plan is quite widespread. But this is not enough to close the reform-related gaps in the statutory pension insurance system. This is the conclusion of a new study by the Economic and Social Research Institute (WSI) of the Hans Bockler Foundation.

Since the 2001 pension reforms, occupational pensions have taken on a new function: they are no longer just a supplementary benefit. Instead, as the second of three pillars of the pension system, it should "secure the standard of living in old age in conjunction with the statutory pension insurance," according to WSI social insurance expert Dr. Florian Blank and Sabrina Wiecek.

Based on the WSI survey of works councils, the researchers determined which companies with codetermination offer company pension plans and to what extent employees take advantage of the opportunity to invest a portion of their wages tax-free for old age. Or if they get extra payments from the employer for this purpose. The evaluation makes clear that there is "by far not in all companies" an offer for old-age provision. And even if corresponding options exist in the company, the works councils surveyed state on average that less than half of the employees make use of so-called deferred compensation.

In view of these findings, the researchers advise: "A uniform and comprehensive solution to the problem of foreseeable differences in old-age provision should primarily consist of a return to public pension insurance that safeguards the standard of living and protects against poverty."Only if this is not politically feasible do the experts believe it would make sense to accelerate the expansion of occupational pensions. According to Blank and Wiecek, regulations would then be needed to ensure greater dissemination of occupational pensions and to ensure that contributions and acquired entitlements of different employees are more uniform.

No nationwide coverage. The study is based on data from just under 2.000 companies with works councils as a basis. The study is representative of co-determined companies with 20 or more employees. 72 percent of them, i.e. by no means all, offer their employees a company pension plan. If a deferred compensation plan is offered, works councils report on average that just under 40 percent of employees make use of it. In relation to the entirety of the companies surveyed – including those without an offer – the usage rate is only 23 percent.

The spread of company pension schemes varies according to the size of the company: Nine out of ten large companies with more than 2.000 employees offer retirement benefits. Among businesses with fewer than 50 employees, only six in 10 do.

In addition, WSI researcher Blank points to the latest figures from the German Federal Statistical Office, which show that participation in company pension schemes is strongly dependent on income: Only 6.2 percent of employees with a gross hourly wage around 10 euros or less use the option of deferred compensation. For higher earners, on the other hand, who get more than 23 euros per hour, it is a good third. "So far, company pensions, just like Riester pensions, are bypassing the very people who need them most," says the scientist.

According to Blank, this fact also calls into question the discussed supplementary pension. This is because it envisages paying the pension subsidy only to former low-income earners who have made company or private provisions for their retirement. "But low-income workers in particular lack the financial means to do so," says Blank.

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