GERMANY- The German Insurance Association confirmed said contribution rates for individual pension plans were likely to rise next year due to longer life expectancy and this could hit the number of savers.
A spokesman for the Gesamdverband der Deutschen Versicherungswirtschaft (GDV) told IPE premium increases were expected after the actuary association, Deustche Aktuarvereinigung’s (DAV), latest statistics showed life expectancy was rising. He said: “It is not only that we are growing older, I also mean that we are growing older more slowly than in the past, with medicine and life style changes granting us longer lives.”
He added that it would be up to each company to decide whether and how to alter prices through actuarial calculations but, according to the daily paper Handelsblatt, the contributions rates in new contracts could increase by up to 10%. Other factors affecting premium increases were each company’s risk assessment, client age and the state of its reserves.
Any increase in premiums could affect savings rates, the GDV warned. Currently, there are 17.5m people with individual pensions, and the GDV said a significant price change could make some clients defect, although this was not in their best long-term interests. A fall in the take-up rate would have “fatal consequences”, he said.
He said: “Yes, insurance would become more expensive with higher contribution rates, but if people live longer pension provisions must be financed for a longer period.” And he said the alternative of a less-generous state pension meant they could not stop saving.
”Naturally there could be repercussions on the second pillar too, but one must also consider each different case,” said Klaus Stiefermann, general manager of the German corporate pension association, Arbeitsgemeinshcaft fuer Betriebliche Alterversorgung (ABA).
Stiefermann explained ABA had not yet “investigated” the matter, although some members were “dealing with the issue”.
“We can safely say life expectancy is continually growing and that means one can either continue to pay the same and have a smaller_pension or one can pay more to keep the same pension value. This is the question.”