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ECB interest rate cut tantamount to 'expropriation', says German association

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The European Central Bank’s (ECB) recent decision to lower its benchmark interest rate from 0.25% to 0.15% has been “tantamount to expropriation from private households and savers”, according to the VFPK, Germany’s association of company pension funds.

Helmut Aden, chairman at the VFPK, lamented that people “did not have a chance to accrue assets for their pension provision” and claimed this had been by “political design”. 

He called on the ECB and politicians to “end the hunt for record low interest as soon as possible” and stop moving “in the wrong direction”.

According to Aden – who is also a board member of Germany’s largest Pensionskasse, the BVV – the ECB’s low interest rate policy will have “dramatic consequences for millions of future German pensioners”.


He argued that the consequences of the “politically set” low-interest-rate environment that had been in place for several years now “would be disastrous”.

“With its policy, the ECB is conveying that there is no added value in supplementary pension saving,” he said.

Another problem he sees is the postponement of pressing reforms and adjustments while the low base rate is “mainly used to refinance unprofitable or even non-performing loans” and to avoid “valuation corrections at all costs”.

He said this inertia regarding reforms would serve as a second blow for future pensioners.

In recent months, Rainer Jakubowski, Aden’s colleague on the BVV board, has issued similar warnings that German pension funds would run into trouble achieving minimum guarantees if interest rates remained low for much longer. 

He argued that institutions were being “punished” by the ECB for investing in most asset classes returning 3-4%, which is roughly the guarantee level.  

The VFPK currently represents more than 4,200 company pension funds in Germany.

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