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Young Germans ‘mistrust first pillar system’, survey finds

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Only a third (34%) of Germans aged between 14 and 29 trust that the state pension will provide enough for them in retirement, according to a survey multi-employer scheme MetallRente.

Instead, 61% preferred to put their trust in occupational pension plans, according to the poll conducted in late November.

Among the 1,000 surveyed individuals of all age groups, 48% trusted the state pension and 56% trusted occupational pensions.

The survey also provided a boost for Germany’s new pension law, the Betriebsrentenstärkungsgesetz (BRSG), which came into effect on 1 January.  

Just over half of the young people surveyed trusted pension plans that were set up jointly by employers and employee representatives, known as the Tarifparteien.

Under the BRSG, the Tarifparteien of each industry can now set up pension plans without guarantees but with a “defined ambition” goal. It is the first time German law has supported pension funds without guaranteed retirement incomes.

Heribert Karch, managing director at MetallRente and chairman of the pension fund association aba, said the results of the survey were a good omen for the start of the new legal framework.

“The wish for a better retirement provision and the trust in the Tarifparteien is considerable,” he said in a press release.

“It is their task to intervene if necessary and provide a high as possible ‘target pension’ through collective investments providing generational equality,” Karch said.

He hoped that opt-out provisions would help to increase the number of participants in occupational pension plans.

Companies setting up the new plans will no longer have to provide guarantees but they have to reimburse the pension plan for any tax advantages they get from paying parts of salaries into pension plans. However, it is yet not fully clear when and to what extent these legal provisions will have to be applied.

For these and other reasons Karch noted at a conference last autumn that it would be some time before the first pension plans under the BRSG appeared on the German pension stage. 

Meanwhile, MetallRente is preparing itself to be among the first providers of these new pension plans – along with the BVV.

“Entities like MetallRente clearly confirm the advantages of occupational retirement saving in large collectives,” Karch noted.

The pension plan has announced it will continue to pay a 3.65% interest on its savers’ assets in 2018 “despite the low income environment”.

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