BERLIN — Several German companies are restructuring, or are considering restructuring, their pension schemes into defined contribution schemes or cash balance plans, a move they hope will save millions in future contributions.
German companies have been converting their book-reserve plans to advance funded pension plans since the mid-1990s. That shift gained steam in the past year, especially after a decision last spring by the two major U.S. credit ratings agencies to treat companies' pension obligations as corporate debt.
But now the trend — boosted by Bosch, Siemens and Lufthansa — seems to be toward defined contribution plans, or in some cases cash balance plans, and away from traditional defined benefit plans.
Robert Bosch GmbH, Wiesbaden, plans to shift its book-reserve pension plan to a funded defined contribution scheme, one company source said. Bosch has €3.2 billion in pension liabilities for its German operations. The source said it will be awhile before any change is implemented.
"It is going to happen eventually, but we are waiting to see the platform we can use. It may be awhile off," said the source, who requested anonymity.
But Bosch is already well down the road in converting its schemes in other parts of the world, including the United States and Japan.