Deutschlandrente & Co .: Alternatives to private provision
Tuesday, 02.02.16, written by Juliane Wellisch
With the Germany pension, three Hessian ministers have presented a new pension model and have restarted the discussion on the future of old-age provision. The ministers support a state-owned fund that can close pension gaps and reduce costs compared to private provision. Now they get backing from the consumer centers.
Germany pension: So the pension insurance could be reformed
According to the three Hessian ministers Tarek Al-Wazir (Greens), Stefan Grüttner and Dr. Ing. Thomas Schäfer (both CDU) offer a supplement to private and company pension plans. Due to population growth and longer life expectancy, pay-as-you-go statutory pension insurance faces considerable challenges . It is to be expected that pension benefits will often be insufficient for future generations. For a long time, politicians and financial experts have been advising consumers to take additional retirement measures. However, both Riester pension and occupational pensions are considered by many experts to be too expensive and inadequate. The model Germany pension builds here at low cost .
So should the Germany pension work
The idea of a Germany pension is simple. In addition to the contributions to the statutory pension insurance , pensioners automatically pay into the Germany pension . It is not a pay-as-you-go system, such as pension insurance, but a simple provision product , which, unlike private pension contracts, has lower costs. Since the Germany pension does not have to be advertised and the expenses for the administration or for commissions are reduced or eliminated altogether, more money flows into the actual old-age provision . The German pension is to be managed, for example, by the Deutsche Rentenversicherung, since this can operate without its own profit interest.
- Our service for you
- Secure your retirement now with the right old-age provision.
- Request a quote
Germany pension: criticism and counterarguments
Critics fear that the Germany pension could become a compulsory pension . The Hessian ministers are actually building their plans for automatic provision. However, they allow for the possibility of an opt-out , ie a rejection of the Germany pension by unwilling contributors. Another point of criticism: If the pension fund is state-owned, it would be possible for the state to use this money in financial emergencies. Klaus Müller, CEO of the Federation of German Consumer Organizations, told the FAZ that the Germany pension is indeed a “worthwhile idea”. Regarding possible state access, however, it would be necessary to clarify in advance how the pension assets will be protected, “perhaps even through a constitutional commitment.”
Are there any alternatives to the Germany pension?
The Germany pension is far from the first plan to reform the statutory pension insurance . Especially with regard to impending poverty in old age, there have already been several concepts that should, for example, support low earners with extended pension entitlements. The plans for a living-wage pension or even solidarity provide for an increase in low pension payments to up to 850 euros . Prerequisite for this is an existing private pension. In addition, the claim only exists if, for at least 40 years of contributions, 30 years or more has been paid into the pension fund . However, according to many critics, this concept bypasses reality. After all, it is precisely former low-income earners, whose pension entitlements are less than € 850, who usually did not have enough income during their working lives to invest a part in private old-age provision.
Retirement Savings Account: Proposal already on ice since 2012
The life benefits pension is not the only suggestion. The State of Baden-Württemberg has already advocated in 2012 under consumer minister Alexander Bonde with the pension account a very similar concept to the German pension. According to this, a non-profit association, such as Deutsche Rentenversicherung or the Kreditanstalt für Wiederaufbau (KfW), should enable every consumer to have a retirement savings account with low administration and acquisition costs . In addition, the plans provide for the inheritance of the accumulated pension assets and the calculation of a “realistic life expectancy” in the pension calculation.
This proposal has not yet been taken up by the current federal government as well as the plans for Germany pension . Individual states such as Baden-Württemberg can not go it alone. Because the pension policy is decided at the federal level .