PThe brave new world of pensions is dawning just in time for the coalition negotiations. On the one hand, thanks to the corona pandemic, old-age pensions are rising sharply because the crisis-related decline in wages did not affect them, but the subsequent rise did. The previous government had already suspended the “catch-up factor” that was supposed to prevent this effect.
On the other hand, the Ampel coalitionists promise to keep pension provision affordable in the future with the help of the capital market: the state pension fund is to invest a capital stock in securities in order to be prepared for the phase in which the baby boomers retire before they retire the situation relaxed again at some point. In addition, there should be a state fund into which people pay for private provision if they do not actively decide against it.
Conflict of worldviews
The combination of both elements, state and private, levy and provision, is new in this form and owed to the cross-camp character of the future government alliance. For decades, with changing economic conditions, two worldviews clashed with one another when it came to old-age provision.
At the turn of the millennium, the statutory pension was seen as an obsolete model that could hardly be saved. Those who could, preferred to buy equity funds with their money or put it in private pension contracts. This principle got its first scratches when the dot-com bubble burst, and it fell into disrepute with the financial crisis of 2008. It was only then that many people realized that custody accounts, bank accounts or life insurance are not safe for all time.
Then there was the falling interest rates. Suddenly even investment advisors calculated that voluntary payments into the state pension fund still offer better return opportunities than the offers of insurance companies with their dwindling guaranteed interest rates and comparatively high acquisition fees.
Money cannot be preserved
The followers always argued as if their model had an eternal value, as if it were permanently removed from the course of time. According to its advocates, the pay-as-you-go system means that the state pension is completely unaffected by fluctuating interest rates, inflation rates or share prices.
On the other hand, its supporters claimed that private provision is completely demographical, after all, the required capital is already in the account or in the custody account when it is needed – as if the money, one of the most fantastic but also most fleeting achievements of civilization, could be so easily preserve like an Ötzi in eternal ice.
Neither of the two models is safe for all time, however; ultimately, they are based on one and the same prerequisite: the efficiency of the economy at the point in time when the insured want to draw their pension.
There is no ultimate certainty
This cannot be overlooked in the legal system. The fact that the state pension fund has recently fared better than predicted in long-term forecasts was primarily due to the good economic development in the past decade, rising wages, growing numbers of employees and the successful integration of immigrants into the labor market.
With private provision, the risk can be spread more broadly, a deposit with American tech stocks or Chinese up-and-coming stocks makes prosperity somewhat less dependent on developments in Germany and Europe in old age. But here, too, the global economy remains a decisive factor. And on Amrum or on the Tegernsee, infrastructure and services must also be available in order to be able to do something with the money.
It would therefore be wrong to treat pension policy as an isolated issue in the coalition negotiations. Much more important for the security of future retirement benefits are the progress made in other areas, such as digitization or the successful transition to a climate-friendly economy, in terms of work and employment as a whole. If that succeeds, the pension problems will somehow be resolved. Otherwise, catch-up factors or stock cushions will not help too much.