Germany needs more private pension - Rürup
GERMANY - The German pension system should bemade up of 60% state pension and 40% private retirement provision, pension expert Bernd Rürup has told a conference in Berlin.
Following the annual Handelsblatt conference on occupational pension, Rürup commended the German government on its pension reforms over recent years which he said had led to a "sustainable financial position" of the system and pension levels which can be sustained over the long term.
He pointed out the raised retirement age of 67 was unpopular but contributed to the stability of the system, though argued recent reforms mean the state will only provide a basic pension in the future.
"Therefore, the share of funded pensions has to be increased so that 60% of retirement provision comes from the state and 40% from private retirement provision," he pointed out.
"If all the state subsidised instruments are used the retirement provision will even be higher than before," he added.
Rürup dismissed critics who argued given all the subsidies the state could have remained the sole provider of pensions by arguing the subsidies only were a fraction of the cost of having a one-pillar pension system.
He conceded that many asset classes have suffered falls in the current crisis so with them had funded retirement provision, but he claimed the German system had a "very high standard of security".
Klaus Heubeck, of the Heubeck-Feri pension consultancy, also warned funded pension systems should not be demonised in the wake of the crisis but said he expected occupational pension provision to shift more from funds to insurance-based instruments.
Pension fund associations and company representatives also renewed their criticism at the conference of applying Solvency II to pension funds by arguing the system already had enough safety measures.
But Peter Schwark, head of the German insurance association GDV, maintained it would be good to have Europe-wide standards for companies and how they measure risk.
"It is not about competition but about trust in the pension system," he pointed out.
Elsewhere, consultancy Watson Wyatt Heissmann has looked at pension plans of 250 German companies and noted "occupational pension provision is seen as an integral part of the salary".
WWH also found that employees are encouraged more and more to contribute themselves as one in seven employers is upping contributions if the employee also pays into the system
In over 7% of the pension plans employee contributions are mandatory.
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