BONN, Germany -- Hopes for private pension reform in Germany were deferred recently when the new Red-Green coalition talks failed to come up with any specifics.
Instead, the new government -- composed of left-of-center Social Democrats and the environmentalist Green Party -- reiterated the standard socialist line that "state pensions will remain the decisive pillar" and put a halt to the state pension cutbacks that were to go into effect on Jan. 1.
After both parties made pension reform a key part of their campaigns before the Sept. 27 elections, expectations had been high that the new government would act swiftly.
"The SPD and Greens have come a long way -- they have a new consciousness when it comes to pension plans," said Winfried Fuest, a research fellow at the Cologne-based Institut der Deutschen Wirtschaft (Institute for German Economics).
That made the lack of specifics quite disappointing. The coalition contract signed Oct. 20 simply stated that employer-related plans and individual savings for retirement "must be strengthened" and that employee stock ownership plans be increased.
Ideological clashes between the moderate and left-leaning wings of both parties led to the vague formulation of reform plans, sources said.
Klaus Esswein, president of State Street Global Investments GmbH in Munich, summed up what many in the industry felt about the new government's statement: "It's noncommittal and too little. The demographic curve is running against all the pension models we have in Germany. Pension reform has to be at the top of the government's list of things to do."
Last summer, the Pension Reform Commission (Renten Reform Komission) formed by the former Kohl government's finance ministry, made recommendations favoring Anglo-Saxon-style defined contribution corporate retirement plans, including both defined benefit and defined contribution plans.
Some experts such as Bert Rurup, professor for public finance at the Technical University Darmstadt, are willing to cut the Red-Green coalition a little more slack.
Mr. Rurup, who helped the last government put together its social security reform package, is a member of the SPD and consulted with the Green Party on their pension reform plans. He thinks the new government will make reform a priority.
"The issue is critical and they know they have to act," he said. "I expect that they will quickly come up with a plan to reform the pension system -- definitely by the end of next year."
Mr. Rurup expects the new government to call another pension reform study group, "to achieve the same goal with a different formula," i.e. one that more heavily emphasizes the state pension.
Whatever happens, Germans are getting ready. Said Gerd Richter, director of William M. Mercer in Germany: "We consultants are on the starting block and have prepared various models -- whatever the coalition decides, we'll have a plan to offer."