Old-age security: Federal government wants to create share reserves for pensions

Millions of baby boomers of retirement age are putting social security funds under pressure. Therefore, the traffic light wants to break new ground in pension financing. However, Heil does not want to shake the pension at 67.

the federal government In the future, it will also rely on the capital market for long-term pension security. A capital stock is to be gradually built up from public funds, from the income of which the pension contributions and the pension level are to be stabilized in about 15 years.

“In order to make long-term provisions, we are creating generation capital in the form of a share reserve for statutory pension insurance,” said the Minister of Labor Hubertus Heil (SPD) before the eagerly awaited presentation of his second pension package to the German Press Agency in Berlin. He will launch his pension package in the next few weeks and thus permanently secure the level of pensions.

With the share reserve, the traffic light coalition wants to break new ground in the history of the Federal Republic. So far, the pension has only been financed by contributions and taxes. Last year alone, the federal government had to pay out grants of 100 billion euros from its budget. Finance Minister Christian Lindner (FDP) warned that without setting a new course in an aging society, both contributions and federal grants would have to increase sharply. Therefore, the previous concept is not sustainable in the long run.

the FDP had already promoted a stock pension before the 2021 federal election, with part of the pension contributions going directly to a fund. In the coalition agreement, the SPD, Greens and FDP then announced a capital stock of initially 10 billion euros. The money is to come from loans and will grow to a three-digit billion amount in the coming years through interest and further payments.

The federal government bears the risk

Heil emphasized: “It is important that the money is invested well, securely and for the long term.” This is to be done via a politically independent foundation, the Fund for Financing Nuclear Waste Management. What exactly is invested in should be published transparently.

The federal government bears the risk Lindner. If share prices fall and the investments yield less returns, this will be compensated for from the federal budget. It is not about a maximum return, which means a lot of risk, but about stable, broadly diversified and at the same time profitable investments. Social and sustainable criteria would also be applied.

Heil explained that in future the statutory pension will be financed “from three sources”. In the long term, the income from “generational capital” would be added to the contributions and the tax subsidy. Only at the end of the 2030s should the generational capital yield enough to really be able to stabilize pensions.

Criticism of stock investments

Criticism came from social organizations, the left and trade unions. “Instead of developing sustainable concepts for promising financing of old-age security, the ministry is ready for risky experiments,” said Verena Bentele, President of the VdK social association. The chairwoman of the Social Association Germany, Michaela Engelmeier, told the newspapers of the Funke media group: “SoVD is convinced that there is no good pension policy on the stock market.”

The left-wing pension expert Matthias W. Birkwald said that Heil should not give in to the FDP’s illusion that pension finances could be put in order “via credit-financed, state gambling with many billions of euros”. “The time of low interest rates is over for now.” DGB board member Anja Piel and Hans-Jürgen Urban from the board of IG Metall welcomed the “planned stop line at the pension level”. At the same time, Urban demanded that a “share pension” should not become a risk for the claims made by the insured. Piel also warned that the risks should not get stuck with the pension insurance.

No contribution limit planned

A new stop line for pension contributions is not under discussion. Such an upper limit of a maximum of 20 percent for the contribution rate will apply until 2025. “If the pension contribution rate increases, the federal subsidy also increases automatically,” said Heil.

He pointed out that the contribution rate has been stable at 18.6 percent since 2018. “The contribution rate will also remain stable longer than some scientists have predicted,” he said. Heil referred to the bubbling contribution income from record employment. “Today we have five million more employees subject to social security contributions than ten years ago.” For stable pensions, however, further successes on the labor market are necessary – for example in securing skilled workers, employing women and more qualified immigration. In addition, the traffic light coalition is planning reforms to strengthen private and company pension schemes.

Retirement at 67 remains

Heil smashed employer demands to link the retirement age to increasing life expectancy. “An increase beyond the age of 67 would be alien to life and would mean a de facto reduction in pensions for many people who can no longer work at this age.”

However, Heil spoke out in favor of bringing the actual retirement age of around 64 statistically closer to the statutory one. More health protection is needed. “We have far too many people who get sick in the workplace and therefore have to retire early.” Chancellor Olaf Scholz (SPD) said in December: “It is important to increase the proportion of those who can really work until retirement age.”

Heil called on companies to give older workers opportunities. “To do this, we need the willingness of companies to hire employees over 60 who have become unemployed.” Heil rejected the possibility of a pension without deductions after 45 years of insurance.


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