In the future, the so-called generation capital is intended to reinforce the current state pension. By 2035, 200 billion euros should be available. But regardless of this, experts believe that private provision is important.
Germans receive an average monthly pension of 1,543 euros after at least 45 years of insurance. According to the Federal Ministry of Labor, men receive an average of 1,637 euros and women 1,323 euros per month. For most Germans, the statutory pension is the main source of income in old age. But fewer and fewer contributors are compared to more and more pensioners. The state already subsidizes the pension fund with around 100 billion euros per year.
In order to stabilize the pension system, the government coalition does not want to reduce pensions or further extend working lives. That is why the so-called generation capital should support the pension system in the future. At the start, twelve billion euros are initially planned to be invested in the capital markets.
Federal funds in equity funds
“The federal government provides funds for this. They are placed in funds and invested there primarily in stocks,” explains Michael Heise, chief economist at HQ Trust tagesschau24. In this way, a fortune is saved over time. At first the amount is still small compared to the expenses. “It takes time and returns before there is a capital stock that can provide relief.” But every relief is important, “in this respect, generational capital is a sensible alternative.” At the same time, it is a good sign that more people are turning to stock savings.
Margarethe Honisch, founder of Fortunalista, a platform for financial education, appreciates how important this private provision is tagesschau24 before: “35 percent of women in Germany receive less than 600 euros in pension.” This is mainly due to the family constellation that women stay at home and – at times – have no income. “It is important to also protect the person who takes care of the household and children and cannot build up their own provisions during this time,” advises the financial expert.
Popular form of retirement provision
Younger savers between the ages of 18 and 29 are particularly in favor of stock pensions: 69 percent. This was the result of a Forsa survey among German citizens between the ages of 18 and 70 in August on behalf of the Minority Shareholders Initiative.
Retirement provision through stocks plays a minor role among all respondents at 18 percent (previous year: 19 percent), but a growing majority of 59 percent (previous year: 55 percent) generally consider stocks, stock funds and ETFs to be a suitable option for retirement security.
“It’s important to build knowledge”
Many people are shocked when they realize their pension gap: This is the difference between their current income and their expected pension. “Women in particular then ask themselves why their pension is so low,” says Honisch. The connection between income and working hours is often not noticed. “Many people think: ‘It will work out.'” Above all, there is a lack of knowledge about how to change the current situation. Overall, it is important to look at your own situation, be able to assess your own risk, set goals and then create the right mix of precautions for yourself.
Most people who have never come into contact with the capital markets think that the topic of retirement planning is complicated, says Honisch. But getting started is actually quite easy: a book could be a door opener, a fee-based consultation or a course to explore the topic of finance step by step. “No matter which path you choose, the important thing is to build up knowledge.” And of course: to start. “The issue of retirement planning doesn’t go away if you ignore it.”