Germany’s Deutsches Aktieninstitut (DAI) has called for the planned private retirement savings account to be expanded to occupational pension schemes.

Private pension provision in Germany is currently being debated by the Bundestag, with plans for a share-based and high-yield supplementary pension.

DAI believes that the proposal has the “potential to act as a catalyst”, but it requires new, flexible framework conditions.

DAI chief executive and members of the board, Henriette Peucker, said: “We have the chance to get something right in the area of pension provision.

"The proposed pension savings account is simple, guarantee-free, equity-oriented and high-yielding. If implemented correctly, it can act as a catalyst for a better standard of living in old age.”

Peucker said the coalition government could make a “major breakthrough” if it opens up the retirement savings account to occupational pension schemes in the upcoming consultations.

“For employees, the retirement savings account would then be a simple solution for taking their occupational pension scheme with them when changing employers. For companies, it could reduce the effort involved in offering their employees an occupational pension scheme,” she explained.

In addition, DAI has called for several other features to make the product a success.

For example, it said guarantees or annuitisation should be mandatory.
Furthermore, the institute also believes there is “room for improvement” when it comes to tax incentives for the retirement savings account, especially when compared to other countries.

In the USA, for example, retirement savings accounts are supported with a tax allowance equivalent to around €6,500 per year, roughly three times what is currently planned in the draft bill.

Other countries such as France, Canada or Ireland offer even more generous support for pension savings accounts, DAI said.

This support, it argued, helps to secure the standard of living in old age for the general population.

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