GERMANY - Germans should not only be investing in their pensions through Riester-Rente but also through occupational pension schemes - says German labour minister Ulla Schmidt.
Speaking at the German pension industry body Arbeitsgemeinschaft fuer betriebliche Altersversorgnung’s conference in Bonn today, Schmidt said: “In these difficult time people need security, the very least that we should be doing is relying on two of the three pillar pension possibilities. But really all three.”
Riester-Rente are private pension products named after labour minister Walter Riester.
Schmidt rejected attacks on the complexity of the Riester products. She compared it to buying a car - deciding on make, looking around, test driving, considering price etc.- and said that people should be spending the same amount of time when thinking about buying a product for their retirement.
She highlighted the number of Riester take-ups and called the product a success. At the end of last year around three million Germans had signed up for one - significantly lower than Schmidt’s original target of four million.
The German occupational pension market has experienced fits and starts, due largely to frequent overhauls to the system which have left people confused. However, both Schmidt and ABA chairman Boy-Juergen Andresen were positive about the future of occupational pensions.
They pointed to figures from the Bertelsmann Foundation. The think tank has conducted a study of private and occupational pension take-up among 30-50 year-olds in Germany. It found that around 54% of private sector employees with a working week of at least 15 hours have an occupational pension at their disposal, compared with 42% in mid-2002.
Schmidt said that she was fairly calm about occupational pensions going forward - but added that the area needed further improvement. Andresen said that the system has so many structural possibilities and that this advantage that many other countries lack we must get to know and use.
ABA secretary Klaus Stiefermann agreed that a firm base for occupational pensions in Germany had been made but added that what is needed is stability. “There have been so many changes made every few years that stability is now what we need for the long term.”
On an international level Schmidt also gave her support to proposals under way by the European Commission regarding portability of pensions and equality for men and women.
Andresen was complimentary about the Riester products, calling them ‘top rather than flop’. And that at modest expense could be ‘further topped’.