Old-age provision in Germany is about to take a decisive step. This is to prepare a so-called focus group, which met for the first time on Tuesday at the Federal Ministry of Finance (BMF) in Berlin. Results are not yet known. It’s about the basics: In principle, continue as before? With life insurance, Riester and Rürup pensions and similar offers? Or a whole new system with a share-based public fund, like in Sweden?
“In the first session, improvements to existing Riester contracts will be discussed in addition to an inventory of the status quo of private old-age provision in Germany,” said the ministry on the agenda. The traffic light government had announced a reform of private old-age provision in the coalition agreement.
Another five meetings of the experts are to follow, at which the test orders announced in the coalition agreement are to be processed. This includes the question of whether a publicly administered pension fund with the option to opt out makes sense.
The focus group intends to present its final report in the summer, and the Ministry of Finance plans to publish it.
The committee is headed by BMF State Secretary Florian Toncar (FDP). It is intended to present a concrete concept for the reform of private old-age provision announced in the coalition agreement. In addition to the promised publicly managed fund, this also includes pension products with a better return than the state-subsidized Riester pension.
In addition to the government, consumer advocates, trade unions, insurers and fund providers are also present in the group. The general association of insurers (GDV) is represented by its general manager, the former SPD state secretary in the BMF Jörg Asmussen. He has since left the party.
The question of future private old-age provision is politically very controversial. Due to the aging of society, which puts the state pension system under pressure, Germans should also make provisions for retirement. Since 2002 there has been state support for savers who accumulate money with a Riester pension.
However, she has been criticized for a long time. With an impressive 16 million contracts, the distribution is large, but it has been stagnating for years. Only just under ten million consumers call on the state allowances. Consumer advocates criticize the high cost burden. In the last legislative period, the government therefore wanted to enter into discussions with the insurance industry about creating a reformed Riester standard product, but nothing came of it.
Problem case Riester pension: There are hardly any attempts to revive it
The situation has deteriorated further since the Riester pension in its current form was no longer profitable for most insurers with new contracts after the maximum guaranteed interest rate was lowered. Although interest rates on the capital market have risen again, it will take several years before this is reflected in Riester. So far there have been hardly any attempts to revive the Riester pension.
The insurance industry has long called for the concept to be reformed and, above all, for the obligation to receive the contributions paid to be abolished. Now the GDV has presented a different concept that essentially works in the same way as Riester, but is said to be simpler. In a statement, the GDV identified the complexity of the allowance procedure as the biggest problem with the current system, and advocated a simplification. The model is now called “Bürgerrente”. The insurers only want to guarantee receipt of 80 percent of the contributions paid.
The GDV does not want to approach the costs. The “citizen’s pension” is also to be sold primarily through insurance agents and brokers with correspondingly high commissions. Year after year, German life insurers pay out around eight billion euros for acquisition costs in all forms of life insurance, which they repeat from their customers. Most of these are commissions. These costs are at the expense of the return for savers. The insurers expressly do not want to change anything in the system.
Consumer advocates want a publicly managed fund with no distribution costs
On the other hand, the Federation of German Consumer Organizations (VZBV) is campaigning for a publicly managed fund that invests savers’ money at low cost. There should be no sales costs at all, the management of capital investments should be advertised among private companies and therefore remain inexpensive. The association had already positioned itself accordingly in the past with its concept of “extra pension”. He also calls for a clear departure from the Riester pension. The VZBV is represented in the working group by Dorothea Mohn, head of the financial market team. Stiftung Warentest also takes part in consumer protection.
In addition to the BMF, the Federal Ministry of Labor and Social Affairs and the Federal Ministry for Climate Protection and Economics represent the government. This means that all three parties to the traffic light are represented. In its positions, the FDP is close to the insurers. She wants to push through changes, but not approach the commission system. The SPD and the Greens, on the other hand, are in favor of a comprehensive reform and want to reduce or abolish commissions.
On the provider side, the Federal Association of Investment and Asset Management is present alongside the GDV. The social partners, the Federal Association of German Employers’ Associations and the German Federation of Trade Unions, as well as the lobby association Working Group for Company Pension Schemes are also involved.