The statutory pension has a miserable reputation. It’s surprisingly low for many who retire, doesn’t protect against poverty in old age, and is unfair to younger people, who might later get even less pensions than their parents. At least that is the widespread impression. A survey in the spring revealed that almost half of the people in Germany are worried about their livelihood in old age. 45 percent of 30- to 59-year-olds fear that they will be in a bad financial position when they retire. Pessimism is particularly great among 18 to 29 year olds. Here, 49 percent fear that their money will run out in old age. The trend is towards more private provision.
The Social Association Germany (SOVD), one of the largest social organizations in the country, now wants to change the mood. A few weeks before Minister of Social Affairs Hubertus Heil (SPD) wants to present his second pension reform, a campaign is intended to pave the way for strengthening pensions – and counteract further privatization. “The pay-as-you-go pension as we have it is social, solidary and secure. But it has a bad image,” says SOVD CEO Michaela Engelmeier. The campaign, which is now taking off on the internet and social mediais primarily aimed at young people, i.e. those who are particularly skeptical about pensions.
Like other social organizations and the German Federation of Trade Unions, the SOVD sees the development towards more and more private contracts and funds for old-age provision as a mistake. The disadvantaged employees because they would have to pay for it alone, while the employers stayed out. And it makes old-age provision dependent on the capers of the stock market. The challenge is to get people interested in the topic at all, and younger people at that – that’s what makes the campaign so special. The Social Association of Germany tries to present the complex topic in a simple way with a trendy website, with explanatory videos, question-and-answer articles and a quiz.
Nevertheless, with plenty of facts. These are, for example, the repeatedly mentioned average pensions of 990 euros per month, after deduction of contributions for health and long-term care insurance. This isn’t enough to live on, obviously. But it is only the average, which includes many mini-pensions, also from people who worked briefly as employees, but then became civil servants or self-employed. On the other hand, those who have paid most of their working life into the pension fund usually get significantly more. After at least 35 years of insurance, the average pension is already 1310 euros, according to the SOVD.
A stock-based annuity does not assume rehab
The association argues that the statutory pension has undeniable advantages. “Rehab measures and disability pensions, for example, are not covered by a private, stock-based pension,” says Engelmeier. The statutory pension increases regularly, it is financed jointly by employees and employers, and it enables flexible entry into retirement.
How the mood develops should also have an impact on pension policy. Here the federal government is looking for a middle way: the pension should be stabilized, but money should also be invested in the stock market. The report of a group of experts on private old-age provision is also expected shortly. The expected message: People should make more private provisions.