SozialpartnerRente Pension provision in partnership
R+V Versicherung and Union Investment have teamed up to offer a solution for the ‘defined ambition’ pension. This new type of occupational pension provision enables employers’ associations and labor unions to create a custom retirement pension solution for the employees in a particular industry. There are advantages on both sides: Employers are released from their liability and employees benefit from greater potential returns.
A new type of occupational pension provision has been available since the start of 2018: The defined ambition arrangement is designed so that employers’ associations and labor unions can reach agreement on a custom occupational pension solution for their specific industry. They determine the individual features of the pension and find a suitable pension provider.
R+V Versicherung and Union Investment have together developed a solution for the defined ambition pension, called SozialpartnerRente. The two cooperative enterprises are offering the new defined ambition occupational pension solution to all employers and labor unions in Germany. R+V and Union Investment can tailor a custom product for each industry that reflects the wishes of the employers and labor unions in question. “R+V and Union Investment are both leading providers within their sectors in Germany and have worked together successfully for years,” says Dr. Norbert Rollinger, Chief Executive Officer of R+V. To date, employers and unions have not reached agreement on a defined ambition arrangement in any industry. But as soon as this happens, R+V Versicherung and Union Investment will be ready to step forward as a partner.
Over recent years, occupational pensions have become an increasingly important component of retirement provision. Since 2002, all employees subject to social insurance contributions have been legally entitled to pay some of their salary into a pension. This means that employees can convert some of their income into tax-free contributions to an occupational pension. However, only around 41 percent of those eligible in Germany have taken out an occupational pension or, as has been agreed for public-service workers, a supplementary insurance policy. This is evidenced by figures from Union Investment’s ‘pensions atlas’ for Germany, which was compiled by the University of Freiburg. Take-up of occupational pension provision is particularly low in small and medium-sized enterprises.
“We are delighted that politicians have given a significant boost to occupational pension provision and the role of asset managers by introducing this new law.”
Hans Joachim Reinke, Chief Executive Officer of Union Investment
The German Act to Strengthen Occupational Pensions (BRSG) should provide help in this regard, for example with the defined ambition concept. Hans Joachim Reinke, Chief Executive Officer of Union Investment, believes it is a step in the right direction. “We are delighted that politicians have given a significant boost to occupational pension provision and the role of asset managers by introducing this new law.”
R+V Versicherung and Union Investment are offering the SozialpartnerRente product through their jointly owned subsidiary R+V Pensionsfonds AG. R+V Versicherung, one of the biggest and most experienced occupational pension providers in Germany, runs the subsidiary and takes care of advice and customer relationship management. Union Investment, a major asset manager, structures the special fund in which employees and employers invest the money that will be used for the occupational pension later on.
Adhering to the wishes of the employers and unions in question, R+V and Union Investment draw up a custom SozialpartnerRente concept and strategy for the particular industry. This is partly based on the social partners’ expected returns, which determine the allocation and weighting of the asset classes, such as equities, fixed income, and commodities. Insurance components, such as for disability or surviving dependants, can also be integrated into the SozialpartnerRente product, creating a comprehensive and effective pension scheme for employees.
Employees pay contributions into the new SozialpartnerRente and, in return, receive life-long pension benefits when they retire without the employer having to guarantee a minimum amount. The new law provides greater flexibility when it comes to investment. “This means employees can be offered solutions with plenty of potential, while employers are released from their liability,” says Reinke. Small and medium-sized enterprises, which until now have often not had an occupational pension scheme, can sign up to the SozialpartnerRente product for their industry.
“Thanks to this expertise, we will as always be a long-term and dependable partner for all industries with the new SozialpartnerRente.”
Dr. Norbert Rollinger, Chief Executive Officer of R+V
R+V Versicherung accounts for 27 percent of new occupational pension business in Germany. It has extensive experience with pension provision for entire industries, through the dedicated schemes available in Germany for the chemicals industry (Chemie Versorgungswerk), engineering industry (MetallRente), pharmacy industry (ApothekenRente), healthcare industry (KlinikRente), and agricultural industry (Landwirtschaftliches Versorgungswerk). “Thanks to this expertise, we will as always be a long-term and dependable partner for all industries with the new SozialpartnerRente,” says Dr. Rollinger.