Leading pensions academic Axel Börsch-Supan has suggested the German government introduce a semi-mandatory corporate pension.
The call comes as the Mannheim University professor released a study showing that Germans face a pension deficit of up to €215 a month because they underestimate the length of their retirement.
The report, for the German Institute for Retirement Provision (DIA), found that males and females in Germany underestimate the length of their retirement before death by five to seven years.
Because of this, the DAI said Germans between the ages of 40 and 49 would need E215 per month (E2,580 per year) more for their retirement. For Germans between the ages of 50 and 59, the deficit was E112 and for those aged 60 and above it was E61.
“Almost 60% of German households do not currently have enough savings to cover the pensions deficit,” says Börsch-Supan.
To remedy the problem, he suggests that the government introduce a semi-mandatory corporate pension. According to him, employees could automatically get access to a defined contribution (DC) plan, unless they decide to opt out.
Since the Riester pension reforms were launched in 2002, employees in Germany have had a legal right to a DC scheme. However, unless the employer already offers a DC scheme, the impetus has been on the employee to have it set up.
Although the idea of a semi-mandatory corporate pension finds favour with other German pension experts like professor Bert Rürup, neither the governing Social Democrat-Green coalition nor the Conservative opposition currently supports it.
German social affairs minister Ulla Schmidt reaffirmed that, if re-elected in September, an SPD led government would not make retirement saving of any kind obligatory. Angela Merkel, who is the chancellor candidate for the Conservatives, has also ruled out the measure.