“Betriebsrentenstärkungsgesetz”: The Social Partner Model – Desire and Reality of the Newly Created Defined Contribution Scheme

27 April 2022

The social partner model

In the “Betriebsrentenstärkungsgesetz” (BRSG) of 2017, the newly created social partner model for occupational pensions (“betriebliche Altersversorgung”, bAV) is of great importance.

By means of a pure defined contribution plan, also known as a target pension, the social partner model is intended to reach employers (ER) who were previously not interested in offering occupational pension plans for their own employees and to motivate them to set up an occupational pension plan for their employees. A guaranteed benefit is not envisaged or permitted. Nor is there any obligation on the part of the employer to pay benefits to the employee. The employer is only required to pay a mandatory employer contribution of 15% if it saves on social security contributions. The employer can also make additional security contributions.

The employee (EE) receives immediate vesting of the pension and has a transfer right if he changes the employer. Currently, he can transfer the accrued capital to the same pension scheme of the new employer, provided that the structure of the new pension scheme permits this. If this is not possible, he can continue the contract privately after leaving the company and save for it.

Impact on existing occupational pension plans

In addition to the opportunities that this new form of defined contribution promises, it is also important to recognize and examine the challenges.
The social partner model can have a “pull effect” on existing company pension agreements and result in the desire for a changeover (on the part of the employer and/or employee) for new or existing employees. Different handling of the occupational pension scheme, depending on the date of entry into the company, can then lead to tensions. Legal aspects must also be examined in detail. The extent to which the so-called three-step theory of the Federal Labor Court (“Bundesarbeitsgericht”, BAG) – which deals with the permission of the employer to reduce or change current occupational pension entitlements – has been discussed more frequently since the social partner model came into force and has currently gained in importance due to the long-lasting low-interest phase. In particular, this discussion focuses on the so-called “future service”, i.e. the benefit promised at the time the occupational pension plan is concluded but not yet earned up to the current point in time.

In the current debate about the social partner model, the rules on when it is possible to intervene in occupational pension entitlements are taking on a new dynamic – because the three-stage review scheme does not apply to collective agreements. In its ruling of February 27, 2007 (Ref.: 3 AZR 734/05), the BAG states: “The three-stage review scheme developed by the Senate for the substantive review of interventions in pension entitlements is not transferable to collective bargaining agreements The limited review of collective bargaining agreements is justified by the fact that the autonomy of collective bargaining – as explained – is protected by Article 9 (3) of the Basic Law (“Grundgesetz”/Constitution).

Martina Ahrendt, a judge at the BAG, commented on this at a specialist event and stated with regard to the three-step scheme: “This is not easy even for us at the BAG.” In practice, she said, the justification of an encroachment by collective bargaining regulations must always be assessed on an individual and results-oriented basis. “In the calculation, it is necessary to calculate and compare the claims under the two different pension schemes,” says Ahrendt. It is only possible to make a completely accurate and final decision as to which pension plan is more favorable when the insured event occurs, “especially in the case of pay-related pension commitments.” (Source – external link)

In the context of advising both collective bargaining parties, we ourselves have already dealt several times with the legal framework conditions of existing and new occupational pension offers and supported collective bargaining parties in the development of solution models.

Transfer / Combination

Design of the social partner models

In addition to the legal review of the existing pension schemes, the institutional design of the new pension scheme is equally important.

Here, too, a precise review of the possible variants and the cooperation of the collective agreement parties (CA) is required, because the new model can currently only be concluded within the framework of a collective agreement.

Expected Offers

The fact that no social partner model has yet been implemented by the CA parties does not mean that they are not interested in doing so, but rather that these further-reaching legally created framework conditions are being carefully examined by the CA parties in order to explore possible variants. However, there are currently some hurdles that hinder BaFin (Federal Financial Supervisory Authority) approval. Therefore, the legislator should make improvements here if the model is to be successful on a broad front.

New tasks and next steps

Our exemplary presentation on the institutional design of the pension scheme highlights some of the relevant points. We would be happy to show you further and detailed assessments and documents on the current state of the market. We can provide you with further exemplary examples and important aspects to be considered in the implementation of a social partner model.

We will be happy to assist you individually in your company with the possible implementation, effects, progress and necessary measures, including the change process and acceptance of the bAV.


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