Pension: equity funds, entry age, grants - what the traffic light coalition has agreed on

How will Germany's pension system continue?

This question is largely answered in the new coalition agreement - at least for the next four years.

Berlin / Munich - The future government alliance has agreed on a coalition agreement that has some serious innovations in store for the population.

The hotly debated topic of pensions * and old-age provision is also mentioned in the written elaboration of the traffic light from the SPD, Greens and FDP.

We explain the most important points with regard to the German pension system:

German pension system: Government coalition agrees on the following resolutions

• The government is

  foregoing pension cuts

  and a higher statutory

  retirement age

  .

  The level of the minimum pension should be permanently 48 percent.

  The official starting age for the statutory pension will continue to be 67 years, contrary to the warnings of some experts.

• The

  pension contribution

  will not exceed the 20 percent mark in the upcoming legislative period.

  This value is currently 18.6 percentage points for German employees.

• According to the will of the SPD *, the self-employed, freelancers as well as civil servants and politicians should also pay into the statutory pension insurance in the future.

  At least one

  contribution obligation

  for state employees is not mentioned in the coalition agreement.

  It is different for the self-employed and freelancers: You should pay into the pension insurance in the future, unless you are already covered by other means.

Pension: Entry into capital coverage

• In order to be able to maintain the current pension level and to avert a further increase in the entry age *, the traffic light plans to partially

  fund

  the statutory pension - with

  equity funds

  that are professionally managed by a public body. In the first step, a sum of ten billion euros is to be invested in the global financial markets in 2022. The plan is to strengthen the otherwise pay-as-you-go pension system with an IPO - and counteract demographic change. The Federation of German Consumer Organizations (VZBV) has long been calling for a state fund that has proven itself in countries like Sweden.

• In addition, the traffic light coalition has agreed that the

  catch-up factor

  *

  suspended in 2018 will

  be reintroduced.

  This means that pension cuts that have recently failed can at least be made up for in good economic years.

Traffic light pension plans - criticism from the Institute for the World Economy

How do experts rate the pension plan of the traffic light alliance made up of the SPD, Greens and FDP *? If the Institute for the World Economy (IfW) in Kiel has its way, the next government’s strategy has room for improvement. The IfW describes the entry into capital coverage as “laudable, even if additional debts are likely to be incurred for it”. However, the state would "soak up credit" in the coming year, according to

prognosis

. In addition, the German pension system is "administered rather than actually meeting the demographic challenges," according to the economic experts.

Those who want to retire earlier should be careful.

When entering early retirement, there are a few things to consider that should be clarified early on.

An overview.