Würzburg. The President of the German Pension Insurance (DRV), Gundula Roßbach, urged patience when setting up the new capital pension - "especially in phases when things are not going well on the capital market - then perseverance is required," she said at a DRV event.
It is certainly possible to collect the first contributions as early as 2028. However, the entire introduction process will take far more time. Sweden, which serves as a model for the new capital pension, also took a good five years.
The capital pension is the new core element of the Pension Commission's recommendations, which would transform the German system: In the final expansion, contributors and employers should pay an additional two percent of salaries, which will then be invested in the capital market - parallel to the traditional pay-as-you-go system. In the medium term, this should enable higher pensions for later generations - depending on the development of the capital markets, from 2040 at the earliest.
According to the DRV, the Swedish pension fund AP7 achieved an average annual return of eleven percent between 2000 and 2025. A model calculation by the Leibniz Center for European Economic Research (ZEW) came up with a possible additional pension of 150 euros per month after 20 years of savings and more than 770 euros after 45 years.
The federal government wants to decide on the plan for pension reform as a whole by Christmas, but initially only sets key points for capital pensions.
It is already clear that immense amounts of money would be collected: from 2032 onwards, 40 billion euros would flow in per year upon completion. The trillion mark would be reached after less than 25 years. Roßbach warned that these immense sums must absolutely be protected from the “desires” of politicians.
This requires a clear long-term investment strategy that exclusively pursues the interests of the insured and does not have to meet any other economic policy objectives, such as strengthening certain industries or start-ups.
According to the Swedish model, direct access by the state to the money is not possible anyway, Roßbach made clear. This is because the capital accounts should be assigned to individual insured persons.
However, it must also be ensured that the funds that invest the money on the capital market do not do so in the interests of a government, but only in the interests of the insured. In Sweden, the process is constantly monitored and improved by a cross-party group of MPs.
German politicians also need to clarify whether and how people who become unable to work benefit from capital pensions, warns Roßbach. Since they can no longer pay contributions, the state could then take over their contributions.
The same question arises for surviving dependents who, according to the Pension Commission's plan, should under no circumstances benefit from the capital pension at the expense of other contributors. Sweden has solved this question through a right to choose, Roßbach reported: Individual insured persons can decide whether they want to additionally insure their families in the event of their death. But then their own pensions from the investment would be correspondingly lower.
In addition, it must also be negotiated to what extent periods of raising children, training and unemployment are taken into account in the capital pension. In the statutory pension based on the pay-as-you-go system - which should remain the basis of the pension - no or only small contributions are paid.
Insured persons should be able to choose either the state fund or other private funds to invest their money in the capital market. But these must be strictly certified, demanded Roßbach. In Sweden, an independent fund selection authority is responsible for this. Initially there were around 800 funds to choose from.
The number is now only half as high - also because there have been cases of abuse - and should be further reduced to 150. Because 80 percent of Swedes invested the money in the AP7 sovereign wealth fund anyway.
The DRV President warned that better information for insured persons is absolutely necessary in the future. Because of the choices and fluctuations on the capital market, the expected capital return also changed from year to year.
It is a big challenge to explain this to the insured again and again and thus prevent uncertainty, said Rossbach. The Netherlands could be a model: There, the pension fund organizes information events on three “pension days” throughout the country every year.
