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COLOGNE, Germany -- Few German employers are willing to offer new pension plans unless Germany first reforms tax laws and eases investment restrictions, according to a recent poll.

An ad hoc poll of the Confederation of German Employers' Assn., or BDA, indicates interest in private pensions is at a low point with little hope of change under new German chancellor, Gerhard Schroeder.

Juergen Husmann, head of the BDA social security section, said few employers are eager to install pension plans. "Economic barriers are the greatest hindrance," said Mr. Husmann. "Employers see the tax burden, the limited investment possibilities and the restrictions on outsourcing, and they just say, 'No.' "

Hope of a change now rests with Germany's newly elected chancellor. The new coalition government forged from the Social Democratic Party and the Greens has pledged to revitalize Germany's social security system, but the all-important tax issue remains uncertain.

"The (party) has made it clear it will close corporate tax loopholes to gain revenues for its reforms," said (party) social insurance expert Klaus Vater. "The new finance minister will have the final say."

That could be bad news for employers. Germany's new finance minister, Oskar Lafontaine, was the driving force behind plans to roll back employer-friendly social insurance reforms initiated last year. "Few employers believe Mr. Lafontaine will sacrifice the over 3.3 billion marks ($2.0 billion) in tax revenues required for the reforms," said Eugen Mueller, BDA director of social insurance.

The tax issue is critical. Under current German law, German employers must treat contributions to employee pension plans as wage costs. The resulting taxes boost employer-sensitive labor costs, which already are among the world's highest.

Mr. Mueller insists the tax revenue argument is shortsighted. "Everyone knows the social security system is wobbly. Fewer workers are supporting a fast-growing number of pensioners. Demographic change makes emphasis on company pension plans a must. Besides, pension funds with greater capital investment possibilities would fuel the economy."

Germany must modernize pension fund regulations by deferring taxation of benefits until an employee retires and offering the option of defined contribution plans, said Mr. Mueller, who favors incorporating elements of pension funds found in other countries.

Last year, a government report commissioned by the Finance Ministry looked into the possibility of setting up in Germany private pension funds such as those found in the United Kingdom and the United States. The result gave validity to employers' concerns, said Mr. Mueller. "The study concluded that it wouldn't take much to improve the German system. We already have a form of pension fund, but it needs to be made more tax-friendly."

Defined contribution plans are among the employer-friendly elements needed, said Mr. Mueller. German employers can offer defined benefit plans but not defined contribution plans. Pension plans are often insurance-based and must adjust benefits in accordance with inflation. "Defined contributions would allow companies to set up plans that tie benefits to company performance. It would have more flexibility to tie benefits to company growth," he said.

Four changes are essential, says Mr. Mueller.

* Deferred taxation is needed for all company pension plans.

* Employers need the option of offering defined contribution plans as well as defined benefit plans.

* Pension fund administrators must have more investment options for plan assets. Under German law, no more than 30% of most plans' assets may be invested in securities.

* Employers' external pension fund reserves should be tax-exempt. Such reserves, which allow employers to draw on the funds for other corporate purposes, are currently taxed.

Despite tax drawbacks, company pension plans are far from dead, contends Jens-Peter Stoehr, the treasurer of Deutsche Shell A.G., a subsidiary of Royal Dutch/Shell Group. Deutsche Shell created a pension fund of 2 billion deutsche marks ($1.22 billion) early this year to generate higher returns from its assets.

The pension plan is a book-reserve account, a type commonly used by German employers, but it is part of a separate trust fund, which gives Deutsche Shell greater freedom to invest in stocks and bonds.

According to Mr. Stoehr, the trust will enable Deutsche Shell to gain a greater return on its assets than the company would have in a conventional pension arrangement. Under the book-reserve system, German companies can make tax-deductible pension contributions but must invest assets back into the company. Most large German corporations have pension plans based on book reserves, which Mr. Stoehr says is the most tax-efficient way of financing pension debt under German law.

Unfortunately, a trust fund solution is not open to all German companies, said Axel Heitkamp, an Aon Jauch & Huebener executive board member who helped develop Deutsche Shell's program. "Companies must be able to take advantage of U.S. accounting rules to make full use of this option," he said. "And there is no way around having the transfer of reserves taxed (when switching them to external funds). Still, investment opportunity is a definite advantage. Pension contributions are still considered assets."

Mr. Heitkamp said he hopes Germany's new government will move toward the BDA's position. "Pension funds such as those found in the United States and Great Britain do have benefits. They allow for the flexible allocation of funds; have (deferred) tax advantages; and are not subject to insurance regulation, which restricts their investment policy."

For the time being, however, the trust solution may be the best Germany has to offer. For some, at least, it is the best move. Netherlands-based electronics giant Philips Corp. already has signaled it will launch a similar trust in Germany.