A statutory capital pension in Germany is to be introduced into the country’s pension insurance system, modeled on the Swedish approach, according to a government report.
The Swedish public pension system is a mandatory state scheme that covers the entire tax paying public in the country, and is funded by an 18.5 per cent contribution from annual earnings.
According to the report, the returns from the German version of this pension will, in the long term, raise the pension level for younger savers. It also acknowledged that building up this capital pension will take time, and therefore a transitional factor will be implemented.
Another of the report’s 33 recommendations was that the statutory pension insurance is to be modified into an insurance scheme for all employed persons, with the long-term goal of including further professional groups such as the self-employed, civil servants, and members of parliament. All newly self-employed individuals who are not currently covered by mandatory insurance are to be included in the statutory pension insurance scheme.
The retirement age in Germany is also to be raised and linked to increasing life expectancy. Based on current projections for life expectancy, the standard retirement age would rise by approximately six months every ten years. The current retirement age in Germany is 64.
Concrete measures are also to be developed in a dialogue with social partners to significantly increase the prevalence of company pension schemes, if the commission’s recommendations are to become law.