[13364]
April 6, 2001
TO: INTERNATIONAL COMMITTEE No. 25-01
RE: GERMAN GOVERNMENT INTRODUCES PENSION REFORM LEGISLATION
The German government has introduced pension legislation that would create a new
type of occupational pension scheme in Germany.1 The pension legislation is currently being
debated in the lower house of the German Parliament (Bundestag). We briefly describe below
what we understand to be the proposed legislation.
The proposed pension legislation would create a new type of occupational pension
scheme – pensionsfonds – in which employees may contribute up to four percent of their salary
(in 2008) exempt from tax. We understand that three products would be eligible for the system:
mutual funds, bank products, and insurance products. Retail mutual funds could not be used
for the pension scheme, and special funds must be created. The funds also must be managed by
a German management company.
We understand that the proposed legislation would impose more flexible investment
rules on pensionsfonds by moving away from restrictive quantitative investment rules to
qualitative investment rules. At this time, the proposed legislation does not provide details of
the investment rules. As a result, the specific investment requirements and restrictions remain
to be seen.
The proposed legislation would require pensionsfonds to guarantee capital upon
retirement and to insure against longevity risk. To provide for longevity, pensionsfonds must
pay either an annuity upon retirement or a lump sum that must be used to purchase an annuity.
There also may be discussion of coverage of other biometric risks (disability and premature
death), and coverage of these biometric risks may be incorporated into the legislation.
We are planning to form a working group to share information and identify member
concerns through scheduled conference calls when there are particular pension developments
in the member states of the European Union. We are scheduling a conference call for Thursday
April 12, 2001 at 12 p.m. EST to discuss the German legislation. If you would like to join the
working group and plan to participate in the conference call, please complete the attached
1 The pension legislation also would amend the current occupational pension schemes. This part of the
legislation was passed by the lower house but was rejected by the upper house of Parliament and is now in
the conciliatory committee.
2sign-up form and fax it to Laura Whitehead at (202) 325-5841 by COB Wednesday, April 11,
2001. If you have any questions about the conference call or the proposed legislation, please
contact me at (202) 326-5810 or at jchoi@ici.org.
Jennifer S. Choi
Assistant Counsel