The German Green Party – Bündnis90/Die Grünen – is opposing the idea of beefing up funds for equity investments within the first pillar pension system – dubbed Generationenkapital – introduced by finance minister and chair of the Liberal Party FDP Christian Lindner.

“The Greens stand by the coalition agreement to allocate a capital stock of €10bn to the [first pillar] pension system,” Frank Bsirke, member of parliament for the Greens, said in an interview with the German press agency Deutsche Presse-Agentur (dpa).

But the Green party will oppose any idea of “growth” of the capital stock to deploy into the equity pension fund, he added.

Bsirke, former head of the union Ver.di, made clear in the interview that the German pension system will not be fit to face the challenges in the coming decades through “stock speculation”.

The comment by the Green MP lay bare the different views within the government coalition of the Social Democrats (SPD), Liberal Party (FDP) and Greens on the plan of finance minister Lindner to turn the first pillar pension system into a partially funded platform.

Lindner has unveiled plans to build a foundation under public law, called Stiftung Generationenkapital, to manage up to €150bn in assets in the long term for an equity fund to reform the the first-pillar.

The government will deploy a first tranche of €10bn to start the equity pension fund this year, with the idea of injecting €10bn every year for the next 15 years to stabilise the level of pensions and contribution rates in the long term.

Bsirske said: “To avoid an increase in contribution by 1% through the returns on investments in the long term, you would need a capital stock of €350- €570bn, depending on the amount of the return.”

The “final stage” of development of the equity pension fund and the Generationenkapital concept, envisioned by the finance ministry, mirrors the Swedish premium pension model that is also financed through the contributions of members, according to Lindner.

The Green MP warned against diverting contributions for investment in the equity market “at the expense of millions of pensioners.”

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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