02.07.2019 | KPMG Law Insights

A good one and a half years of the Company Pension Strengthening Act: Already in operation or still to be strengthened – is the pure defined contribution already alive?

A good one and a half years of the Company Pension Strengthening Act: Already in operation or still to be strengthened – is the pure defined contribution already alive?

By Susanne Jungblut (KPMG)

The Company Pension Strengthening Act has been in force since January 1, 2018. One of the centerpieces of the law is the introduction of a pure defined contribution plan, which is intended to relieve the employer of all liability risks beyond the payment of contributions. After almost one and a half years, are there any pure contribution commitments based on collective agreements for the social partner model?

Reminder: What is behind a pure defined contribution plan?

The Company Pension Strengthening Act (Betriebsrentenstärkungsgesetz – BRSG) contains a whole series of innovations aimed at strengthening company pension schemes. One of the most important aspects is the introduction of a pure defined contribution plan. Previously, the German Occupational Pensions Act (Betriebsrentengesetz) only covered defined contribution plans (boLZ) and defined contribution plans with minimum benefits (BZML) in addition to defined benefit plans. In the case of both a boLZ and a BZML, the employer is liable for a (minimum) benefit defined in advance, which is essentially derived from the contributions made. This guaranteed benefit was identified as a significant barrier to the expansion of occupational pensions. In addition, the underlying guarantee – especially in the low-interest environment – significantly restricts the investment strategy and thus also the achievable return.

For these reasons, the BRSG introduced the option of a pure defined contribution plan, in which there are no minimum or guaranteed benefits from the employer or the implementing institution. However, an employer cannot implement such a pledge on its own. Rather, it requires a basis in a collective agreement, i.e. it must be agreed by the collective bargaining parties and implemented via a joint body of the collective bargaining parties.

Are there already pure defined contribution plans on the market?

In the collective bargaining negotiations and agreements of last year and – to date – also this year, the pure defined contribution plan has not played any role. In the metal industry, it was agreed that there would be an exchange of views on the possible content of a pure defined contribution plan before the next round of collective bargaining in 2020. Initially, it was assumed that an agreement on a new supply system might be reached before this date, but at the moment it does not look like this will happen.

On the part of the companies, interest in the introduction of a pure defined contribution plan seems to be rather restrained. For the most part, the DAX30 companies see themselves as well positioned with their current old-world bAVs. Smaller companies either already have what they consider to be a satisfactory occupational pension scheme or are simply waiting to see what the collective bargaining parties will agree.

Since the BRSG came into force, there have been a number of specialist conferences at which stakeholders and companies have been asked what they think of the pure defined contribution plan and what is currently happening on their side. Also, some surveys were conducted on the subject. Our overall impression is that silence largely prevails at present. It is not yet possible to make a reliable assessment of how the market and the collective bargaining partners will move with regard to pure defined contribution plans. In February of this year, the BMAS invited the collective bargaining partners to a meeting in Berlin to discuss the reasons for the hesitant implementation of the pure defined contribution plan. So, to put it cautiously, there is some expectation of policy here. In expert circles, it is feared – and almost expected – that some kind of mandatory occupational pension scheme or state-directed pension fund will emerge unless the social partners meet this political expectation.

The most movement is almost on the part of potential suppliers. Here, there are already syndicate solutions of the insurance industry as well as cooperations between insurers and investment houses, which (want to) offer corresponding unit-linked solutions. In addition, some large pension funds have set up suitable settlement associations for pure defined contribution plans.

Against this background, the news a few weeks ago that the conclusion of the first defined contribution plan was imminent hit “like a bomb”. Ver.di reported that a corresponding (in-house) collective agreement in the insurance industry was about to be concluded and that there were also concrete talks in a company in the aviation sector. Recent statements by ver.di, however, seem to put the brakes on this announcement again.

Conclusion: We will probably have to wait a while longer for the first pure defined contribution plan. Individual employers who are interested in a new-world occupational pension scheme therefore initially have their hands tied. But the old world of occupational pension schemes also offers solutions that are attractive to employees and involve minimal risk for companies. There is therefore no valid reason to wait before introducing or restructuring an occupational pension scheme – especially not against the backdrop of the increasingly apparent shortage of skilled workers and the increasingly important aspect of employer attractiveness in this context.

Explore #more

27.05.2024 | KPMG Law Insights

Agreement on ecodesign regulation: products to become more sustainable

After lengthy negotiations, the Council and Parliament of the European Union reached a provisional agreement on the Ecodesign Regulation on the night of December 5,…

22.05.2024 | KPMG Law Insights

The AI Act is coming: EU wants to get a grip on AI risks

For many people, artificial intelligence (AI) is the great hope for business, healthcare and science. But there are also plenty of critics who fear the…

17.05.2024 | KPMG Law Insights

Podcast series “KPMG Law on air”: When the family business is to be sold

Around 38,000 family businesses are currently handed over each year. In most cases, the change of ownership takes place within the family. But more and…

03.05.2024 | KPMG Law Insights

Doubts about inability to work? What employers can do

The certificate of incapacity for work (AU certificate) serves as proof of incapacity for work due to illness. However, only if the certificate meets certain…

27.03.2024 | KPMG Law Insights

EU Buildings Directive: life cycle greenhouse potential becomes relevant

On March 12, 2024, the EU Parliament approved the amendment to the EU Buildings Directive. The directive obliges member states and, indirectly, building owners and…

19.03.2024 | Business Performance & Resilience, KPMG Law Insights

CSDDD: Provisional agreement on the EU Supply Chain Directive

The EU member states agreed on the CSDDD, the EU Supply Chain Directive, on March 15, 2024. Germany abstained from the vote. Negotiators from the…

21.02.2024 | KPMG Law Insights, KPMG Law Insights

The Digital Services Act – what does it mean for companies?

The Digital Services Act (DSA) is a key component of the EU’s digital strategy and came into force on November 16, 2022. As a regulation,…

15.02.2024 | KPMG Law Insights

Data compliance management: How to implement it in practice

Part 3 of the article series “Professional tips for data compliance management”   The third part of this series of articles deals with data compliance

14.02.2024 | Business Performance & Resilience, PR Publications

Guest article in ZURe: Monitoring the implementation of the LkSG

The current issue of ZURe (p. 20 ff.) contains a guest article by KPMG Law Partner Thomas Uhlig (Head of General Business and Commercial Law),…

09.02.2024 | KPMG Law Insights

Podcast series “KPMG Law on air”: The employment law function

In almost all German companies, the employment law function is located in the HR department and not in the legal department. One of the reasons…


Christine Hansen

Senior Manager
Leiter Betriebliche Altersversorgung

Heidestraße 58
10557 Berlin

tel: +49 30 530199150

© 2024 KPMG Law Rechtsanwaltsgesellschaft mbH, associated with KPMG AG Wirtschaftsprüfungsgesellschaft, a public limited company under German law and a member of the global KPMG organisation of independent member firms affiliated with KPMG International Limited, a Private English Company Limited by Guarantee. All rights reserved. For more details on the structure of KPMG’s global organisation, please visit

 KPMG International does not provide services to clients. No member firm is authorised to bind or contract KPMG International or any other member firm to any third party, just as KPMG International is not authorised to bind or contract any other member firm.