Traffic light pension plans: The share pension comes under different names

IIn terms of social policy, the three traffic light parties have big plans for their future coalition. Your first indent in this chapter of the coalition agreement is devoted to a reform of old-age provision. It becomes clear that the Social Democrats were able to prevail to protect their holding lines. The benefits from the statutory pension should not fall below 48 percent of average earnings, and the contribution rate should not rise above 20 percent of the salary.

Philipp Krohn

Editor in business, responsible for “People and Business”.

The coalition members acknowledge that this is challenging in the face of growing pressure from the high number of baby boomers retiring. That is why they want to think about models in all three pillars of old-age provision that allow higher returns in order to provide additional funds in this way. In all three pillars, that means: In the statutory pension, in the company pension scheme and in the subsidized private pension scheme, they announce that they will focus more on more promising capital investments.

The plan is unusual in the statutory pension scheme, where Germany has an old tradition of funding, but after the Second World War it relied on pay-as-you-go financing. Here, the structure gets out of balance due to the widely differing number of current contributors and new retirees. The financing is no longer fair to the generations. And that is why “we will go into a partial fund of the statutory pension insurance in order to stabilize the pension level and the pension contribution rate in the long term,” says the coalition agreement.

“Partial funded”, not share annuity

Nowhere in the text is there any mention of a share pension, as the FDP had propagated in its election manifesto. The phrase “partially funded” allows investments in other forms of investment. This could also mean investments that institutional investors have always bought for old-age provision: real estate, shares, of course, equity investments or infrastructure investments such as renewable energy systems.

Apart from that, the model clearly follows the FDP idea. A “permanent fund” is to be set up, which will be administered by an independent body under public law. This is not the state fund or the Germany pension in old-age provision as advocated by the Greens and, to a certain extent, the CDU. This was explicitly part of the business and private part of the three-pillar model.

The sympathy that all coalitionists had shown for the Swedish pension model concealed something in the debate that the Swedes had allowed equity investments in the statutory pension, as in the traffic light coalition agreement. This is where the Free Democrats actually leaned most towards Scandinavia during the election campaign.

Ten billion euros for a fund

The coalition partners want to provide this fund with 10 billion euros from the federal budget in 2022. In addition, they want to allow the German pension insurance to invest in the capital market. And they intend to make the funded part of the pension property-protected.

More promising titles should also be able to be used in company and private pension schemes. “We want to strengthen the company pension scheme, among other things by allowing investment opportunities with higher returns,” says the contract. Also shares and Co. The Riester pension is to be fundamentally reformed. A public fund is to be examined here, with “an effective and inexpensive offer with the option of opting out”. New products should enable higher returns than Riester.

It is difficult to determine whether the term “share pension” is deliberately left out of the paper. It is likely that such critical groups of the population will be taken along. Trade unions in particular criticize funded old-age provision because of the market volatility. “For the DGB it is also clear that a fund-based private share pension must not weaken the company pension scheme,” commented Reiner Hoffmann, Chairman of the German Trade Union Confederation.

Its member unions are against the social partner model introduced by Minister of Social Affairs Andrea Nahles (SPD), which also relies on more equity-friendly rules. The future government wants to revive it. There should still be some resistance here.

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