Increased number of employees eligible for work-related retirement benefits

In a bid to secure the standard of living for its citizens, Germany is set to implement a series of reforms in its pension and social election systems.

The head of the German Social Association, Michaela Engelmeier, has called for the statutory pension to be strengthened, stating that the current three-pillar model (statutory, occupational, and private provision) has fallen short.

One of the key reforms involves the flexibilisation of pension fund regulations. This move is aimed at providing more flexibility and options for individuals to manage their retirement savings.

To encourage more participation in occupational pensions, so-called Opting-Out systems are to be facilitated. Under this system, a portion of an employee's salary would be automatically used for occupational pensions, unless they opt out.

In an effort to boost the coverage rate of occupational pensions, tax incentives for these pensions are to be increased. This is expected to motivate more employers to offer occupational pension schemes.

The coverage rate of occupational pensions decreased slightly to 52% in 2023, due to stronger employment growth. However, the number of socially insured employees with active occupational pension entitlements increased by approximately 500,000 from 2017 to 2023, reaching 18.1 million.

To make social elections more accessible, online voting is to be expanded. In a pilot project in 2023, over 330,000 members of five statutory health insurers, including AOK Bayern, Techniker Krankenkasse (TK), BARMER, DAK-Gesundheit, and Knappschaft, were able to cast their votes online.

These reforms aim to provide a more secure and accessible retirement system for the approximately 52 million people in Germany who are able to determine the social parliaments, including members of the management boards of statutory health insurers.