Increased distribution of retirement benefits for workers in occupations

The German government has approved the "Second Occupational Pension Strengthening Act" for debate in the Bundestag and Bundesrat. This act aims to strengthen and further develop the existing social partner model for occupational pensions. Here are some key points and implications of the proposed legislation.

From 2026, the act is set to come into effect, with the pension contribution rising from the current 18.6% to 18.8%. This increase is outlined in the draft law, which also provides for a stable pension level until 2031 and better pensions for millions of mothers.

The act also seeks to increase the number of people with low and medium incomes benefiting from occupational pensions. To facilitate this, so-called opt-out systems for occupational pensions will be facilitated, making it easier for employees to participate.

Occupational pensions are considered efficient and secure, especially when organized collectively by the social partners. Finance Minister Lars Klingbeil emphasizes their importance as an important pillar alongside the statutory pension. Social Minister Barbel Bas agrees, stating that good occupational pensions contribute to a good quality of life in old age.

The tax incentive for occupational pensions is set to be increased, further encouraging their use. Smaller companies will find it easier to offer occupational pensions in the future, potentially as part of a collective agreement.

Risks and returns in occupational pensions may be higher due to the proposed flexibilization of pension fund regulations. However, the act does not address the call for the statutory pension to secure the standard of living again by Michaela Engelmeier, the head of the German Social Association.

The law does not address the expansion of the online voting system for social elections, although a pilot project for online voting in social elections was conducted in 2023, with over 330,000 members of five statutory health insurers casting their votes online. The social elections will increasingly be held online in the future.

The act aims to further develop the existing social partner model for occupational pensions, with the goal of making occupational pensions more accessible and beneficial for a wider range of people. The law's passage and the specific timing are yet to be confirmed.