Occupational pension schemes in Germany

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In the past, companies offered various occupational pension schemes as incentives. Unlike US and Swiss firms, German corporations kept the funds from these schemes (Direktzusage) internally to utilize low-cost capital. However, pressures from rating agencies, particularly those based in Anglo-Saxon countries, along with Basel II regulations, are compelling INFICON GmbH to outsource pension reserves to reduce their balance sheet. These agencies view pension reserves as significant debt. Additionally, EU Regulation 1606/2002 mandates that capital market-oriented companies in the EU prepare group statements according to International Accounting Standards starting in 2005. Rising life expectancy and declining business growth rates further strain German companies, necessitating policy changes in response to global fiscal law pressures on multinationals. This master thesis will offer management recommendations on various methods for outsourcing pension liabilities, with a thorough examination of contractual trust arrangements (CTAs). The final chapter presents a survey of several prominent German companies to identify best practices currently implemented within the German economy.