The draft bill for an Act to Reinforce Company Pensions published at the beginning of November does not deliver any new surprises. In summary, the proposed essential changes starting 2018 are as follows:

• Introduction of a tariff-based pure defined contribution commitment
  • Implementation via direct insurance, pension fund, or pension scheme
  • No minimum or guaranteed payments
  • No follow-up liability for the employer
  • Hedging via a tariff, tax-free contribution of the employer
  • Employer’s obligation for contribution payments in the case of deferred compensation, tariff amount at least 15 %
  • In the collective agreement, social partners can regulate in detail  if and how existing provisions shall be considered at enterprise level
• Possibility of a collectively agreed automatic deferred compensation with the employee’s right to object (opting out)
• Employee’s option to continue reinsurance policies in the event of the employer’s insolvency
• Increase of the tax-free contributions to direct insurances, pension funds and pension schemes to 7 % of the annual income threshold for the state pension plan in Germany (West) (BBG-RV West) (4 % plus 1,800 Euro up to now, i.e. about 6.4 %)
  • Annual values based on 2017: increase from 4,848 Euro (4 % of the BBG-RV West = 3,048 Euro plus 1,800 Euro) by 486 Euro to 5,334 Euro
  • 4 % of the BBG-RV West still exempt from social security contributions
  • Simplification of tax-free retroactive allocations in connection with the exit from the company, more retroactive allocation options if the employment contract has been temporarily inactive
• Fiscal funding model for low-wage earners (monthly wage below 2,000 Euro)
  • If the employer pays an additional contribution of 240 to 480 Euro per calendar year, he receives a “subsidy amount for occupational pensions” via the tax income registration amounting to 30 % of the contribution up to a maximum of 144 Euro per calendar year
• Allowances for basic incomes
• Increase of the Riester allowance and
• Cancellation of contributions from Riester occupational pensions
• Product- and provider-neutral information from the statutory pension insurance institute concerning state subsidies for supplementary pension schemes