Germany’s liberal party – Free Democratic Party (FDP) – have addressed the burning issue of introducing individual accounts for contributions to the first pillar pension system to further develop the generational capital (Generationenkapital) towards a system resembling more closely the Swedish premium pension model, during this week’s Zukunftsmarkt AltersVorsorge conference in Berlin.
The FDP will address the introduction of contribution accounts also in this legislative period, liberal party’s MP Anja Schulz told IPE on the sidelines of the conference.
The two coalition parties – the social democrats (SPD), and the Greens “don’t want this”, she added.
Schultz noted during a debate at the event that without a reform of the first pillar pension system, like the one proposed by the current government, the increase of the contribution rate will be steeper.
The FDP had originally proposed the equity pension Aktienrente reform based on the Swedish model, and specifically on the AP7 fund, with 2.5% of pensionable income allocated to the premium pension, but ended up with a slimmer version of it after reaching a political compromise with coalition partners.
The Generationenkapital, which will make the first pillar partially funded, is part of the package of reforms proposed by the finance and labour ministries, heading towards parliamentary debate.
Markus Kurth, Green Party’s member of parliament (MP) responsible for pension policy, told IPE that his party and the SPD will change the law if the FDP favours the idea of contributions flowing to finance the Generationenkapital.
The Greens are asking to codify the ban on contributions in the law, he added.
With then Generationenkapital, the government plans to build a capital stock of €200bn by 2035, and from 2036 pay a dividend of €10bn per year to the first pillar manager Deutsche Rentenversicherung (German Pension Insurance Association), said president Gundula Roßbach.
The €10bn equal to 0.3 percentage point of contributions, and the €10bn remain constant, meaning that will be over time equal to fewer percentage points, she added.
The finance ministry had suggested to start the Generationenkapital for equity investments with a “not so huge” volume so that it can deal with good refinancing conditions in capital markets, added Rolf Schmachtenberg, state secretary in the labour ministry, during the event.
The government is also preparing the pension law III (Rentengesetz III) for self-employed, he said.
The governing coalition partners agreed to introduce first pillar mandatory pensions for self-employed with an opt out clause, unless they choose a private pension product.
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