The big mistake about the pension

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.

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