The German liberal party (FDP) has put forward a 10-point programme to update the country’s pension system by decisively boosting equity investments through retirement savings, according to a paper approved by the party’s executive board.
The FDP will continue to push for more “capital-backed” pensions in all three pillars of the pension system – pay-as-you-go, occupational, and private pensions.
According to the paper – Equity offensive in retirement provision – FDP is campaigning ahead of the general election in February for a “real statutory equity pension” based on the Swedish premium pension model, the core proposal of the 10-point plan approved by the party’s executives.
Equity pension means that part of contributions paid for pensions are invested in an independently managed fund, an idea that created unresolved frictions within the traffic-light coalition with the Social Democratic Party (SPD) and the Greens opposing it.
“What is important is that [contributions] are invested with the aim of increasing dividends while maintaining security,” said FDP’s designated secretary general Marco Buschmann.
The Free Democrats firmly reject state-run and funded vehicles such as the Citizens’ Fund (Bürgerfonds) proposed by the Green Party. It backs instead the possibility to invest a higher share of assets in company pension schemes in equities, according to the paper.
“The idea is to better use dividends of many years with the compound interest effect,” Buschmann added.
All firms, especially small businesses weary of liability risks, should be in a position to introduce pure defined contribution (DC) plans (reine Beitragszusage), a type of occupational pension signed by representatives of employees and employers, that are struggling to take off.
The FDP promises to clarify open questions regarding the guarantee requirement and liability in company pension schemes, it said.
The party is also in favour of introducing a tax-subsidised retirement savings account (Altersvorsorgedepot) for private retirement provisions.
The FDP fought hard with former coalition partners SPD and Greens to include retirement savings accounts in the third pillar reform drafted by Christian Lindner, head of the liberal party and former finance minister. The bill introduced retirement savings accounts without guarantee to boost investments and returns.
The liberal party, which is struggling in the polls ahead of the election in February to reach the 5% threshold of votes for seats in Parliament, wants to allow investments in crypto ETFs to provide even more opportunities for portfolio diversification, according to the 10-point plan.
It is against new taxes that would only make investments in equities for pensions less attractive, it added.
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