GERMANY – Finance industry lobby IFD has urged the government to create the conditions for a doubling of private pension saving by 2015.
It argues that this is the only way to preserve a high standard of living for future pensioners.
According to IFD, the volume of private pension saving must double to €1.2trn in 2015 from €600bn now so future pensioners can enjoy a “similar standard of living as those do now”.
State pensioners in Germany are currently eligible for a maximum benefit equalling a bit more than 60% of their previous salary.
However, IFD said that as the government benefit was shrinking fast due to demographic changes, “lawmakers must develop a simple, transparent and above all sustainable tax and pensions policy”.
If this is done, “capital-backed pensions will become an important driver of growth for the financial centre of Germany,” IFD added in its first annual report.
IFD also applauded progress made so far in boosting private pension saving. It indicated that between 2002 and 2004, 12 million private pension contracts were signed, 3.8 million of which were the government subsidised Riester pensions.
Launched in May 2003, IFD represents German banks, insurers and Deutsche Börse, the securities exchange. Like German fund industry association BVI, it has called for a simplified private pension similar to individual retirement accounts (IRAs) in the US.
Germany’s conservative opposition has already said that if it wins the September federal election, it will make permanent the tax exemption for employee contributions under the Riester pension. The exemption is due to expire in 2008.
The Conservatives also plan to promote more employment among 50 to 60-year-olds and put the state-run scheme on a more sustainable footing.