The fourth pillar of retirement provision: the CSU wants to prevent old-age poverty

With your proposal, the CSU is designed to complement the existing three pillars of retirement of a fourth pillar. "The state is from birth to 18. Age for each

The fourth pillar of retirement provision: the CSU wants to prevent old-age poverty

With your proposal, the CSU is designed to complement the existing three pillars of retirement of a fourth pillar. "The state is from birth to 18. Age for each child for a contribution of 100 euros per month in a generations-pension Fund, which invests the money in return“, - stated in the party design. This would mean a grant of 21,600 euros per child . The CSU refers to this help as a "starter kit".

That means in clear text: in addition to state pension, occupational and private pension scheme shall, according to the ideas of the CSU in addition a kind of state-controlled pension Fund that accumulates money and invests.

Existing pension system would be

To complement the existing levy would be supplemented funded model, the state pension, with a further column on the Basis of a capital stock. The pension experts and Economists have been calling for for years.

The state pension in Germany is financed levy . This means that The workers pay will be paid on a monthly basis contributions to the pension Fund to current retirees. The principle is: The money is directly transferred to the accounts of the pensioners.

In contrast, the variant, which is based on a capital stock is. This money is accumulated and the capital market – preferably lucrative – created. Thus, it is possible to benefit from high returns on equity – in the times of Minus and even negative interest rates is indispensable in order to achieve even increases in Wealth.

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as a rule, the decades of invested capital increases and brings the later recipients of high income. The CSU proposal a reality, he would provide for higher old-age pensions.

This is from a party point of view, also the reason for the proposal: "the aim is that in the future, any of of the new fourth pillar of retirement provision, the capital thereof receives a generation of pension funds-pension and old-age poverty is to be avoided", - stated in the proposal text. Currently, the pension system consists of the three columns company pension plan, private Pension plan and public service obligation systems – such as, for example, the statutory pension insurance. PDF Everything you need to know about your pension

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Disguised increase in the child benefit

Although the CSU declares to want to do with your model, the Pension increase, there is also a kind of children raising money. This makes sense: In the next ten years the labour market due to retirement of the baby Boomer generation will be deprived of a few million people. The demographic change is exacerbated so: fewer and fewer active workers have to Finance more and more pensioners, old-age pensions. In addition, the life expectancy rises and retirees obtain longer and longer pensions.

The CSU planned pensions-additional financing could be the low German birth rate in the ideal case, increase. That would at least help, to the economy, the experts also in the future provide. Only a skilled immigration law will not be able to solve this mammoth task.

What returns are possible?

Under a large part of the future public pension funding flowing into equities and equity funds, then you can over a period of several decades, per year, a high single-digit return achieve. The German share Institute (DAI) has, at least, with its "yield triangle" for the past few decades calculated.

This is an example: Who invested in the year 1969 money in German stocks and its stocks by the end of 2018 is not touched, scored an annual return of 10.4 percent. For the sake of completeness it should be mentioned that there were also periods where investors in shares of imports of bottom-line losses.

These Numbers, of course, not just to the future can be extrapolated. Especially since never all of the funds of a pension Fund would be invested in shares. However, the historical returns show that capital market instruments promise high long-term value growth – despite any intermediate fluctuations. Even if yields should decline in the future – more than the current mini interest rates are likely to bring in stocks and funds well. Furthermore, additional old-age pensions will relieve the state Treasury when the previous old-age basic security. For recipients of minimum pensions tax payers to bring each year, billion to allow them to higher pensions in the future.

cost to go in the three-digit billion range

However, the CSU is the cost proposal billion. According to the statistics portal Statista 13,59 million citizens lived at the end of 2018 in Germany under 18 . This would be entitled to the CSU proposals to purchase the state pension funding. It is not expected that the birth numbers in the future, continue to fall, then aid for the pensions-a year high amounts: 13,59 million eligible citizens x 21.600 Euro = 293 billion Euro cost .

These costs are for an 18-year-old funding, per year, on average, therefore, 16.3 billion Euro.

The current pension model is unviable,

you do realize that the state pension requires now per year, nearly 100 billion in government grants, then a part of the new promotion of the traditional pension insurance will, in the future, need to be deprived.

this means that The current pension levels of 48.2 percent is likely to decrease. This ratio expresses according to the German pension insurance the following: "The pension level shows the Relation between the amount of a pension (45 years of contribution payment on the Basis of the average income), and the average income of a worker."

is likely to leave you alone due to the demographic change, the current level of pensions would not permanently hold. The German state pension insurance scheme looks so. Up to the year 2030, the pension level was increased from 48,2 to decline to 44.3 percent.

The criticism of a (probable) reduction in the pension level of the classic old-age pension is, however, that there is scope, if a new fourth pillar of the pension increases the pensions as a whole.

the state Commission is mulling over the future of the pension

the German pension system for the future, has used the Federal government to the Commission, "Reliable generation contract". Their proposals will be presented by the Commission in the spring of 2020.

The experts can mitigate in various ways the tense financial situation of the state pension insurance: in addition to a greater reduction in the level of Pensions, a longer working life and/or higher monthly contribution payments to the pension Fund belong to it.

Against this Background, the CSU offers new perspectives. Years of contributions down the drain: Why you absolutely check your pension information FOCUS Online contribution should years gone: Why your pension information

mbe should check
Updated Date: 08 January 2020, 01:00

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