German parties slam FDP’s attempt to reform third pillar pension system

German political parties have slammed the liberal party (FDP) for what they believe is the last, desperate and unilateral attempt before the general election in February to reform the country’s third pillar pension system.

FDP’s parliamentary group has put forward a proposal to reform tax-subsidised private pensions also open to the self-employed, a point not induced in the draft of former finance minister and head of the FDP, Christian Lindner.

The reform proposal also includes introducing retirement saving accounts (Altersvorsorgedepots), cutting guarantees, and the possibility to invest in individual company stocks.

Frauke Heiligenstadt, member of parliament (MP) for the Social Democratic Party (SPD), said during the first parliamentary debate held yesterday afternoon on the FDP’s reform proposal that for the social democrats the first pillar remains the most important source for pension provisions, followed by second pillar occupational pensions.

“Instead of supporting the urgently necessary reforms of the first and second pillars, the FDP brings [to Parliament] only the reform of the third pillar,” she said.

The changes proposed by the FDP create the basis of “state-subsidised gambling”, she said referring to the options of investing in individual stocks, but underlying that the party is not against investing in ETFs or funds.

Carsten Brodesser, MP for the Union – the alliance of the Christian Democratic Union (CDU) and Christian Social Union (CSU) – raised the question of whether the reform proposal of the liberal party actually benefits low-earners in small companies.

He added that his parliamentary group has worked constructively with the finance ministry led by Lindner to reform private pensions, that will “further be supported by us”.

However, the Union rejects the possibility of investing in individual stocks, and backs the introduction of a right for supplementary pension provisions for everyone, including low earners.

The Union is ready to work on this topic during the last mile of the current legislative period and, if the tentative is unsuccessful, in the next legislative period, he added.

Election campaign mode

“Your draft bill is pure election campaign distraction. You are incapable of governing,” said Stefan Schmidt, MP for the Greens, which backs a state fund for private pensions with auto-enrolment and savers paying a share of their wages into the fund.

FDP’s proposal leads to “bureaucracy, unclear return promises, and immense administrative costs”, said Jörg König, MP for the right-wing party Alternative for Germany (AfD), during the debate.

The traffic-light coalition of SPD, Greens and FPD discussed the reform of private pension provisions but did not reach an agreement, liberal party’s MP Florian Toncar said during the debate.

It is very unlikely that FDP’s proposal will find the necessary majority in Parliament, said investment funds association BVI in a statement.

Yesterday’s Parliament discussion showed that Germany’s political parties are already in election campaign mode and are using the opportunity to set their own agenda, it added.

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