2023-11-08 21:50:19
Rather than Monopoly or La Bonne Paye, Germany is thinking of a new way to familiarize its young people with the notion of investment. The council of German “economic wise men”, a body of experts widely listened to across the Rhine, recommended on Wednesday offering 10 euros per month to anyone aged at least 6 years old, until they turn 18, in order to allow him to take his first steps on the stock market.
“One way to facilitate the access of each young person to the capital market would be for the State to provide each child, from 6 years old to 18 years old, 10 euros per month in the form of a share in a fund”, write the five experts in their annual report. “Germans invest relatively little in stocks compared to other countries, we are a country of savers! To change this, we need to improve financial education from school onwards,” explained one of the experts, Ulrike Malmendier, during a press conference on Wednesday.
The estimated cost of this measure would be 1.2 billion euros per year. Long in its infancy in a country where risk-free savings are favored, shareholder culture has recently accelerated in Germany. Nearly 13 million people had invested in stocks, stock funds or ETF certificates in 2022, according to the latest count from the German institute DAI (Deutsches Aktieninstitut). This represented an increase of 830,000 stock savers over one year, with a dynamic particularly noted among those under 30.
Inspired by Israel
The five “economic wise men” – professors of economics, public finance or social economy – want to further facilitate this development and are based here on a model implemented in Israel since 2017. The State pays 51 shekels monthly. (i.e. 12 euros) from birth to a child’s 18th birthday. In Germany, such starting capital could be invested “in a standard product” such as a “publicly managed pension fund”, the wise people suggest.
Another proposal which risks, on the contrary, displeasing young people: in their 423-page annual report, the experts also recommend raising the legal retirement age “gradually” after 2031, adapting it to the rise in future life expectancy. This reform could contribute to the sustainable financing of the legal pension system, by aiming to reduce the ratio between pension beneficiaries and contributors, according to experts.
The legal retirement age in Germany is currently set at 67, according to a reform adopted in 2007, which will apply fully from the generation born in 1964, i.e. in 2031.
“Thanks to the anchoring of an automatic mechanism” linked to demographic facts, “political discussions on adjusting the retirement age must no longer take place on a regular basis”, according to the wise people. Such a reform should also take into account arduous work and people with health problems. Other European countries, such as Denmark, Italy, the Netherlands and Portugal, already adapt the legal retirement age to life expectancy, they argue.
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