There was a point when German politicians lost trust in the financial sector. That was in the fall of 2008. The investment bank Lehman Brothers had just become insolvent in the USA, and Chancellor Angela Merkel (CDU) was badly surprised by the difficulties of the Munich-based Hypo Real Estate. At least a DAX value. Merkel felt that she was not sufficiently informed and almost betrayed. That was the end of the industry for them.
Anyone who wondered why their later governments, whether with the FDP or the SPD, never undertook an obviously necessary reform of pension provision in the many years that followed - this can also be explained. Merkel didn't want to do anything good to those who had so disappointed her. Years later, the Chancellor spoke of the fact that trust had not yet fully returned. And: “It is important that banks also see themselves as serving the overall system.”
Bad speculation by the pension funds
Angela Merkel has not been Chancellor for five years. As Finance Minister, Christian Lindner (FDP) has prepared the law for more capital markets in pension provision, and the Merz government is now implementing it. The fact that Lindner invested in a beneficiary of the financial service provider Ginmon, just a few weeks before the introduction of the retirement savings account, is unpleasant. He may not be a minister or a parliamentarian, but it is this form of taste that pays into the account of all those skeptics who, like Merkel, don't quite trust the financial industry yet.
Recently, there have been repeated reports of incorrect speculation by pension funds. Whether due to a lack of returns in the zero-interest phase, greed or ignorance: investments were made that could at least be described as highly risky, but were often simply unprofessional. It hits the first pillar of our old-age security system, of all things. In other words, the part from which the main income usually flows in old age: pensions, the statutory pension and, for professions defined as freely defined such as doctors, pharmacists, architects or lawyers, their claims from these pension funds.
What was previously considered a privilege reveals its disadvantages in cases of incorrect speculation: there is no safety net. The losses incurred by the Berlin dentists' pension fund are borne by the members themselves. The financial regulator Bafin is not responsible. The states are responsible for supervision. Some may be reminded of the Landesbanken in the financial crisis when there is now talk of impending losses from US real estate speculation by the Bavarian Supply Chamber (BVK) amounting to 853 million euros. It is classified as an authority, is independent in terms of investments and is subject to the legal supervision of the Bavarian Ministry of the Interior.
Other countries differentiate more clearly
The working group of professional pension schemes has so far retreated to the position that “a distinction must be made between the case of the pension scheme of the Berlin Chamber of Dentists, which must be considered separately, and the other 90 pension schemes of the liberal professions”. The Bavarian Supply Chamber refers to the other 122 billion euros of its investments and reassures Bavarian freelancers: “Your supply is and will remain secure.”
A differentiation in the debate would be helpful. Other countries have shown the way and have not condemned the capital markets per se since the financial crisis. It is important to distinguish between an investment vehicle such as shares and bonds in their pure form, which function transparently, cheaply and flawlessly. And on the other hand, the structures the financial industry builds on and around it. Things can get complex and expensive. Lack of transparency invites deadweight loss and excessive fees.
In this respect, the retirement savings account, which the working population can take out from January, is an important step. Unlike before, even very simple (and cheap) structures such as an ETF savings plan can be eligible for funding - without complex structures and guarantees for the rest of your life. Norwegians and Swedes have been showing for many years how focusing on simple investment vehicles can bring success.
As a beneficiary of the reform, the financial sector should handle the advance of trust (which costs several billion for the state treasury) carefully. This requires mutual control, a high level of transparency and the knowledge that politics does not differentiate in cases of doubt if, contrary to all assurances, something goes wrong.
