Finance Minister Christian Lindner wants to strengthen the equity culture with a new retirement savings account. In the guest article he explains why this is the right path for future pensioners – and why he is also committed to supporting the self-employed.
Only twelve percent of Germans have their own stock portfolio. Many people are reserved about securities. They prefer to rely on their classic savings account. The reason: They are afraid of the risks. The real risk lies not in betting on the capital markets, but rather in not doing so.
Demographic change makes it necessary to broaden the pension system. We have to ensure that more people make private provisions for their old age. The well-known Riester contracts are not attractive enough for this – they are too expensive, too complicated, too risky and therefore offer little opportunity. That’s why we’re reforming the promotion of private pension provision so that it becomes more profitable.
We achieve this with an eligible portfolio – without guarantees, but with returns that generate higher long-term returns than other forms of investment and savings. We minimize annoying bureaucracy, simplify requirements and maximize the opportunities for future pensioners. And: We create freedom of choice.
The new depot will be supported with allowances and tax advantages. There should be a basic allowance of 0.20 euros per euro up to a maximum personal amount of 3,000 euros. For people with children, there is still a child allowance in addition to the basic allowance. Tax advantages that previously existed at Riester also apply to depot funding.
Unfortunately, higher funding is currently not politically feasible. I’ll be honest: For me, the eligible amount could have been higher. If professional successes enable higher payments, then these should also be encouraged. Entrepreneurship in particular must not be punished.
That’s why I’m also committed to an important innovation: in the future, self-employed people should also be eligible for funding. At Riester, this was previously only possible in very limited special cases. The expansion is controversial within the coalition. But I am fighting to ensure that the self-employed are also taken into account. Because why shouldn’t the self-employed benefit from the same support as employees or civil servants? Self-employed people also deserve fairness.
There is no contribution guarantee with the new depot. We ensure that people have the freedom to make their own decisions, for example by investing in ETF savings plans or a mix of individual stocks. This makes returns possible that are higher than those of the product universe that has been supported so far.
As with Riester, taxation only takes place in the payout phase of retirement. All income that is generated en route and remains in the securities account is also taxed afterwards. This facilitates highly attractive compound interest effects.
We will also ensure more freedom of choice in the payout phase in the future. With the retirement savings account, you will be able to choose between a life annuity and a plan for payment up to the age of 85. Criticism of this flexibility can be heard here and there. But I am convinced that we should trust people to be able to adapt their subsidized private pension provision to a certain extent to their individual retirement plans. The annuity was not attractive to many today because it is less than the payout plan. Some people also have alternative plans for their old age, for example “retiring” their condominium. And unfortunately not everyone lives much older than 85. The providers of the different variants will compete with each other and thus strengthen freedom of choice.
The reform of private pension provision brings with it another, previously neglected strategic advantage: the possibility of state-sponsored and broadly diversified investments in many different regions of the world and their markets. Anyone who wants to make provisions for their old age in this country can and should of course also rely on the DAX, for example, and benefit from a strong German economy – but not only.
Emerging countries, for example – which have always been an important sales market for our industry – could play an increasingly important role: countries such as China, India, Brazil and Indonesia are still in a catching-up phase when it comes to their level of prosperity. Due to demographic effects, their growth will probably remain above what is expected for established industrialized countries for a long time to come. We should benefit from this not only through our export-oriented economy, but also in the new depot.