In 1957, the German Trade Union Federation (Deutscher Gewerkschaftsbund, DGB) and its affiliated trade unions set up a joint company pension scheme (Unterstützungsfonds) for their employees. Traditionally, the scheme was financed on a pay-as-you-go basis. In the last couple of years, however, the financing of the pension scheme has become increasingly problematic for a number of reasons:
On 23 January 1998, the company works council and the federal executive committee of the DGB trade union confederation reached an agreement on cuts in the organisation's company pensions.
In 1957, the German Trade Union Federation (Deutscher Gewerkschaftsbund, DGB) and its affiliated trade unions set up a joint company pension scheme (Unterstützungsfonds) for their employees. Traditionally, the scheme was financed on a pay-as-you-go basis. In the last couple of years, however, the financing of the pension scheme has become increasingly problematic for a number of reasons:
declining income from membership subscriptions. For example, between 1993 and 1997, the reduction in DGB membership subscriptions amounted to DEM 30 million;
the increasing costs of the pension scheme. For example, between 1993 and 1997, the costs of the DGB scheme increased by DEM 3 million; and
an unfavourable ratio produced by a decreasing number of contributing employees and an increasing number of retired employees entitled to receive benefits from the pension scheme.
Currently, the DGB employs roughly 2,000 people, and 16.8% of its payroll is spent on the pension scheme. Potentially, further increases in expenditure on the pension scheme could have led to further personnel reductions as most trade unions (including the DGB) are subject to guidelines which fix a maximum ratio of personnel costs to membership subscriptions (in case of the DGB: 60%).
In 1995, the DGB federal executive committee (Bundesvorstand) decided on "target numbers for the implementation of the reform of the company pension scheme". The target was to stabilise the proportion of the paybill made up by expenditure on the pension scheme at 13.6% by 2014. In the long run, this proportion should be reduced to 4%-5%. Negotiations between the company works council and the federal executive committee started in autumn 1995, leading to an agreement in the conciliation board on 23 January 1998. It includes the following provisions.
All employees retiring after the conclusion of the agreement will not be entitled to benefits arising from the "benefit guidelines" (Unterstütztungsrichtlinien) of 1983 and 1988. The 1988 guideline guarantees that retired employees will receive 70% of their last gross wage. According to the 1983 guideline, all employees hired after 1983 are entitled to additional pay-related benefits.
Instead, employees will be eligible to the benefits of the 1995 pension scheme (Versorgungsordnung 1995). The 1995 scheme partially changed the method of finance of the company pension scheme from a pay-as-you-go type of system to a partially-funded system. Furthermore, each union pays for its own retired employees and may fix its own level of benefits individually according to its needs and its financial situation.
Employees born in or before 1940 and employed in trade unions for 20 or more years are not affected by the changes.
Employees hired after 1 January 1996 are not entitled to benefits from the company pension scheme. However, the parties to the agreement agreed to renegotiate this point.
Eurofound soovitab viidata sellele väljaandele järgmiselt.
Eurofound (1998), Agreement on cuts in DGB company pensions, article.
