First sectoral agreement on private pensions signed in construction

In anticipation of a pending reform of the German pensions system, the social partners in the construction industry have concluded a new collective agreement on private pensions, which was due to come into force in April 2001. The new law will require workers to contribute to a private pensions scheme, and the construction industry deal thus provides for workers and employers jointly to invest a monthly sum of DEM 78 per head. However, the agreement cannot take effect until the new pensions legislation is adopted.

In late January 2001, the German parliament approved much of the pensions reform proposed by the current coalition government of the Social Democratic Party (Sozialdemokratische Partei Deutschlands, SPD) and Alliance 90/The Greens (Bündnis 90/Die Grünen) (DE0101204F). At the centre of the reform is a dual pension scheme, consisting of both state and private pensions. While the state pension system will continue to provide benefits on a "pay-as-you-go" basis (whereby current pensions are met from the contributions of those currently in employment), the new private pensions system will require employees to pay up to 4% of their gross income into company or other private schemes. Although important parts of the law still need to be approved by the parliamentary upper house, the Federal Council (Bundesrat), the Building, Agricultural and Environmental Union (Industriegewerkschaft Bauen, Agrar, Umwelt, IG BAU) and the two national employers associations for the construction industry (Hauptverband der Deutschen Bauindustrie, HDB, and Zentralverband des Deutschen Baugewerbes, ZDB) have already negotiated a collective agreement which splits the costs for workers' mandatory contributions to the new private pension schemes.

Originally intended to take effect on 1 April 2001, covering some 740,000 west German construction workers, the new agreement provides for a monthly investment of DEM 78 per capita to be paid into one of the new private pension schemes. While employers pay DEM 60 of this sum and thus cover the majority of private pension investment, workers contribute DEM 18 per month. Different rules will apply to some 300,000 workers in eastern Germany, where a monthly sum of just DEM 26 per person is to be set aside.

The new agreement leaves it to the individual workers to decide where to invest their contributions, but IG BAU strongly recommends a new fund set up by the National Savings Fund for the Construction Industry (Zusatzversorgungskasse des Baugewerbes, ZVK). Originally founded in 1957 and jointly administered by union and employers, the ZVK has now created a separate branch for the administration of pension assets, which also complies with the new standards as defined by the law. According to the ZVK, the new fund, called ""ZukunftPlus, will: allow for pension rights to be transferable even when workers move to jobs outside the construction industry; guarantee a minimum return on assets of 3.5%; and allow for individual and variable expansion of investment.

While the management and works council at Volkswagen AG announced their plan to conclude a works agreement on the creation of a company-level pension trust earlier in 2001 (DE0101200F), the construction sector social partners are the first to agree on a binding model for an entire industry. However, the new agreement can take legal effect only when the new pensions legislation is approved by a majority in the Federal Council. Because the opposition Christian Democratic Union (Christliche Demokratische Union, CDU) and the Christian Social Union (Christlich Soziale Union, CSU), which have sufficient votes to block the pensions reform in the Federal Council, both oppose the law on various grounds, it is not at all clear yet when the new pensions system will take effect.

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