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Pension like in Sweden? Demands for pension reform in Germany

2021-03-01T04:53:45.622Z


Old-age provision - it looks a lot different in Sweden than it does in Germany. The debate about the better pension model is still ongoing. What the FDP is demanding in the Bundestag.


Old-age provision - it looks a lot different in Sweden than it does in Germany.

The debate about the better pension model is still ongoing.

What the FDP is demanding in the Bundestag.

Update from February 26, 2021:

The

FDP

in the Bundestag wants to

reform

the

pension *

and introduce a

statutory share

pension

- according to reports, in part based on the Swedish model.

According to

a report by the

AFP

news

agency

(as of February 16), the

proposal by the FDP looks like

this: With a

funded pillar

, the contributors should

benefit

from growth on the international

stock markets

, according to the

AFP

, vice-president Christian Dürr

.

Even today, the contributions to the statutory pension are nowhere near enough to finance the pensions.

The tax subsidy, which is 106 billion euros this year, will continue to grow in the coming years.

The problems with the pension are "one of the greatest dangers for social cohesion".

A reform is also necessary because people can neither be expected to lower the pension level nor to sharply increase contributions.

Also read:

Dispute over double taxation of pensions - experts expect groundbreaking verdict

Concept of the FDP in the Bundestag: Pension based on the Swedish model?

According to the concept presented by Dürr and the FDP social expert Johannes Vogel, as AFP further reported, two percentage points of the previous pension contribution based

on the Swedish model should

flow

into the publicly administered

share

pension

.

In order to compensate for temporary losses due to the reduced contribution to the statutory pension, a higher federal subsidy should first be paid according to the FDP concept.

According to the report, higher

voluntary contributions

and a switch to

alternative capital investment offers should also be possible

, according to the idea.

FDP wants to supplement old-age provision with statutory share pensions

Funded old-age provision

must finally become simpler, more consumer-friendly and, above all, more equity-oriented,” says Dürr and Vogel according to the

AFP

.

The FDP politicians are convinced that

the

statutory share pension

could once again keep the debt brake permanently if the immigration of skilled workers is promoted at the same time.

The

Federation of German Consumer Organizations

(vzbv) welcomed the concept of the FDP, writes the news agency.

"A broadly diversified equity investment ensures more money in old age," said board member Klaus Müller.

"At the same time, risks such as a financial crisis or falling share prices can be cushioned through reallocations."

Old-age provision

in Germany needs a fresh start.

Read here

: Retirement at 63: This is how much money it costs if you want to retire earlier

Ideas for pension reform in Germany: Sweden a role model?

Update from October 14, 2020:

It is said again and again that

Sweden could be a role model when

it comes to

pensions

.

For

Germany

too

?

In Sweden you have a

pension *

made up of three parts: the

state basic pension

, plus the

company pension

- and on top of that there is the private old-age provision.

And it works like this: instead of

relying

on a purely pay-as-you-go model, as in Germany, Swedish employees have to

invest

2.5 percent of their gross income in

pension

funds in

addition to their

pension

, reports the portal

extraetf.com.

What is meant is the so-called funded procedure.

With this contribution, assets should be built up that will later be available to employees when they retire.

While in Germany, in addition to the state pension, another four percent of gross income would ideally flow into the Riester pension,

finanzen.ne

t says, in Sweden it is exactly the 2.5 percent mentioned, which is mandatory for the private one Pension plans would have to be used.

Every citizen can decide for himself what the 2.5 percent of Swedes' gross wages will be used for. 

Pension: Is the “Swedish model” also conceivable for Germany?

"In addition to endless suggestions from private providers as to what the capital can be used for, there is also a state alternative," according to the portal.

The so-called state class administration alternative, Såfa for short, builds up a separate

capital stock

for every Swede

, which, to a certain extent, finances part of the monthly pension amounts through regular investment income.

This state-administered pension

fund

primarily invests in

stocks

and funds, but also in

government and corporate bonds

.

Despite the many advantages of the “

Swedish model

”, there are also reservations. The

main point of criticism

goes back to the high risk aversion of German savers, who of course have to live with the given fluctuations in value when investing in stocks.

“For example, the

Swedish AP-7 fund

lost

seven, eleven and 27 percent in 2000, 2001 and 2002, respectively,” says the report on

finanzen.ne

t.

For security-oriented small investors in Germany, such price losses would be an unreasonable expectation.

"Even if the book losses are all made up again, the fear of personal retirement provision increases in such phases," writes the portal.

Model Sweden: Should the pension system in Germany be changed?

Article of September 16, 2020:

Three pillars - less worries?

It is not the first time that some Germans look (sometimes jealously, sometimes extremely critical) of the

Swedish

pension system

.

There is the

pension *

of three parts: There is a

state basic pension

, plus the

company pension

and, in addition, the

private old-age pension

.

Employees there would have to pay 16 percent of their gross income into the state pension system, according to a report on Focus Online (as of October 2019) - it is

pay-as-you-go

like the statutory German pension scheme 

.

In addition, 2.5 percent would “compulsorily” flow into old-age provision funds as private old-age provision, which works according to the funded procedure.

In other words, a capital stock is being built up.

The idea behind it is, the report goes on to say, that regular income such as dividends finance the monthly payments - and ideally the capital stock remains untouched.

Would such a (similar) model also be conceivable in Germany?

Read here:

Alarming figures: So little money is left for retirees per month

Pension system in Sweden - similar model conceivable in Germany?

In Germany, a model called “

Germany pension

” was discussed

a few years ago

.

A current article on tagesschau.de takes up the topic again and describes it as the concept developed at the time "by the economists Knabe and Weimann and the Hessian state government" Since it is possible to deselect the pension at any time, personal freedom of choice is not impaired, "the article quotes Knabe and Weimann. In other words: employees pay into a

savings plan

- unless they explicitly object.

Read here

: Pension paradise Austria: Seniors collect hundreds of euros more than Germans

The debate about the "Deutschlandrente" is not new

How a so-called

Germany

pension could work?

In a report on Welt.de from 2019, the proposals that were much discussed under this name a few years ago were explained, among other things, as follows: According to the idea behind it, Germany could also create a state fund, and every employee who does not explicitly object would one Pay part of his wages into it, so the thought.

The fund would be managed by Deutsche Rentenversicherung - at cost price with no intention of making a profit - so the costs would be extremely low.

The state would also guarantee the payment.

As is well known, nothing has come of this idea to this day.

Read here:

Top salaries 2020: These professions have the most money

Pension debate - criticism of the "nudging" concept

Because there are definitely critics, according to the current report on tagesschau.de, which, with a view to the

pension debate,

recalls the “nudging” concept developed by Nobel

Prize winner

Richard Thaler, according to which a small change can often make a big difference.

The US behavioral economist turned 75 on September 12.

With regard to private retirement provision, however, his concept of "nudging" could be more topical than ever when it comes to poking something new, so the tenor of the article entitled "A little nudge for a larger pension" .

There has never been such a great change in the pension model.

Quite a few would see it as patronizing the citizen, it says in the article .. (

ahu) * merkur.de is part of the nationwide Ippen digital editorial network.

Help with tax returns

Taxable?

Appropriate control software (promotional link), in which the individual steps are clearly explained, can be of great help.

Sources: Finanz.net;

www.extraetf.com;

Focus, de;

boerse.ard.de;

Welt.de

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This article contains affiliate links.

List of rubric lists: © dpa / Monika Skolimowska

Source: merkur

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