The President of the Ifo Institute, Clemens Fuest, has generally welcomed the suggestion put forward by the German Trade Union Confederation (DGB) for a mandatory company pension scheme, although he simultaneously warned about the additional financial burdens it would place on companies.
According to the President of the Munich-based Ifo Institute, strengthening company pensions is fundamentally sensible. He noted that the current pay-as-you-go pension insurance system will be forced to grow more slowly than wages in the future due to demographic changes. However, he cautioned that requiring employers to finance these pensions partially is problematic, as contributions to supplementary occupational pensions are ultimately considered labor costs. Nevertheless, he added that the scope for further increases in labor costs in Germany is currently limited given the weak economic environment.
The DGB had proposed a mandatory company pension for all employees. Yasmin Fahimi, head of the DGB, had previously stated that such retirement security must supplement the statutory pension and must be co-financed by employers. She added that approximately 20 million employees in Germany currently lack an occupational pension scheme.
