The pension system in Germany works through subsidies.
Pension reform seems inevitable.
But what could this look like?
A
reform of
the
pension
* in
Germany
is currently being discussed intensively.
The
FDP
calls for a restructuring of
old-age provision
*
based on the
Scandinavian model
.
However, there is headwind
from an
expert
and the
German Pension Insurance
.
Frankfurt - Half a year before the
general election
, which will take place on September 26th, 2021, the topic of
pensions
suddenly finds its way onto the political
agenda
in
Germany
.
The voices for a major
reform of
the
pension system
are growing louder.
For
some critics,
proposals by
the
Federal Government's
Pension Commission
do not go far enough.
The
"stop line"
agreed
in the
coalition negotiations
between the CDU / CSU and the SPD
is not sufficient and does not go beyond proposals, it is said.
Part of this included ideas that
should help
stabilize
pension
contribution rates - but which do not because they have not yet been implemented.
Pension reform in Germany - the fund needs billions of taxpayers' money as a subsidy
The
“stop line” agreed
by the
grand coalition
stipulates that the
pension level
should not
drop
below
48 percent
.
The
general pension level
is based on the
average income
in Germany.
There are doubts as to whether the projected level can be maintained, especially since baby boomers from 1955 to 1969 will reach retirement age by 2025.
The cash register is exposed to enormous stress.
In addition, there is a
phase of low interest rates
, which makes
private investment
as a
retirement provision
an unsafe undertaking.
The "Tagesschau" reports that the
pension fund
in
Germany
has
to be subsidized
every year by billions of euros from
taxpayers' money in
order to withstand the pressure.
This should be a quarter of the entire federal budget, that is around
100 billion euros
.
Statutory share pension: FDP warns of over-indebtedness
The
FDP
is one of
the loudest critics of the current
pension system
.
The Free Democrats have been emphasizing for some time that this is an obsolete model.
Germany is threatened with over-indebtedness if
the
pension system is
further
subsidized
.
That is why the FDP proposes a “statutory share pension”.
Specifically, the party wants to
invest
around two percent of every statutory pension contribution in
shares
on the
stock exchange
.
In this way, returns from the capital markets could relieve the pension system, it is said again and again.
"We want people in Germany to benefit from growth on the international capital markets," emphasized Christian Dürr, deputy leader of the FDP parliamentary group, in the Bundestag.
Pensioners in Germany |
number |
---|---|
total |
21,202,082 |
of which women |
12,132,567 |
of which men |
9,069,515 |
As of: July 1st, 2020 - Source: Deutsche Rentenversicherung |
Much cited
examples
are Scandinavian countries,
Sweden
for example.
There, employees are obliged
to invest
2.5 percent of
their
gross income
in pension funds.
Citizens can choose between a state fund and other solutions.
This is reported by the Swedish news agency "Tidningarnas Telegrambyrå".
According to the rating agency “Morningstar”, the Swedish sovereign wealth fund is said to be one of the best in Europe, especially since it incurs very low annual fees.
The
state fund
achieved an average annual return of more than 14 percent in the period between 2011 and 2021, as reported by the “Tagesschau”.
"With the AP7 fund, Sweden is demonstrating how to use the opportunities of stock savings for old-age provision," said Johannes Vogel, FDP spokesman for pension policy, in the Bundestag.
Pension in Germany: Pension reform based on the Scandinavian model would have many advantages
Such systems
also
exist
in
Norway
.
The
stock market is
washing important
returns
into the pension fund there in order to protect the population.
There, too, employees have to
invest
around
two percent of
their gross salary - optional, because: The investment is not a must, just an extra income to the regular
state pension
.
The Norwegian sovereign wealth fund benefits in particular from profits from the oil sector.
"The aim of the fund is to invest the money from the oil business in such a way that the state benefits from it in the long term," explains journalist Clemens Bomsdorf. * He has been reporting on the Scandinavian
state fund
for years
.
Martin Werding welcomes the proposal of the Free Democrats.
He is professor for social policy and public finances at the Ruhr University in Bochum.
"It is an extremely interesting concept with limited risks that ties in with the phase of honest reforms of the noughties," said Werding at the federal press conference.
A
study by
Werding, which was commissioned by the FDP, shows that a
pension reform based
on the Scandinavian model could even effectively combat Germany's indebtedness into the 2040s, according to the
expert
.
Statutory share pension as reform: "Model cannot be implemented"
However, the
FDP proposal
does not only meet with approval.
Gisela Färber, professor at the German Research Institute for Public Administration (University of Speyer), criticizes him - and tells the "Berliner Zeitung": "The FDP model cannot be implemented without massively damaging pensions." Pensioners could make high returns Achieve in this system only in connection with a
high willingness to take risks
, she emphasizes.
The FDP replies that the risk for contributors through long-term investments is very low.
Immediately before the start of the respective
pension,
the Scandinavian model provides that the credit should gradually flow into lower-risk investments.
In this way
, it is said
that
short-term price fluctuations
would have
little impact.
Instead, Färber suggests that people
should
work longer in
order to be able to deposit more.
The Federal Government's Pension Commission dealt with this issue very carefully; it is considered a
sensitive issue
in the election campaign.
Färber's criticism is also shared by the
German pension insurance
.
A statutory share pension would tear a big hole in the pension fund.
The
insurance
warns that the investments would mean a lack of important money in the long term
.
Outlook: is a pension reform coming in Germany?
It
remains to be seen
how intensively a possible
pension reform
will be debated
in
Germany
during the
election campaign
.
In any case, the FDP wants to shape the political agenda with the topic.
It is possible that a comprehensive
reform of
the
pension system
- based on the Scandinavian model or not - will be discussed more fundamentally in the coming legislative period than before.
A
pension
issue
that is currently also affecting many senior citizens is the
double taxation
of
old-age provision
. * One expert accuses the tax offices of “fraudulent deception” in this context. * In addition, many of the contributors are wondering what the basic pension * is all about.
(Tobias Utz)
* fr.de is part of the nationwide Ippen digital editorial network.