The German government is planning to start the fund for equity investment in the first pillar pension system with €12bn this year, following the approval of the budget by parliament, IPE has learnt.

Last week, the parliament’s budget committee (Bundestag) approved the budget for this year with expenditure of around €476.8bn and new loans amounting to around €39bn. After years of exceptions, the debt brake should be fully effective again – at least for the time being.

The budget is well-balanced “despite the difficult initial situation of these parliamentary consultations”, said Dennis Rohde of the Social Democratic Party (SPD), Sven-Christian Kindler of the Greens, and Otto Fricke of the Liberal Party (FDP), following the budget committee meeting, daily newspaper Süddeutsche Zeitung reported.

The parliament will make a final decision on the 2024 budget at the beginning of February.

Initially €10bn were earmarked to start Aktienrente in 2023, before the plan was postponed to 2024, which will now start with the €12bn instead.

According to Frauke Heiligenstadt, member of parliament (MP) for SPD, the governing coalition parties – SPD, Greens, and FDP – reached an agreement on the overall reform package ’Rentenpaket II’, that will also contain the reform of the country’s first pillar pension system.

The government intends to turn the first pillar scheme into a partially capital-funded system to invest taxpayers’ money to stabilise contributions and reduce public subsidies, an idea that finance minister Christian Lindner called Generationenkapital.

Sovereign wealth fund KENFO will manage the first pillar pension assets in the form of an independent foundation for globally diversified and long-term investments.

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