More Capital Coverage in Retirement Provision

In the context of demographic change, statutory pension provision has long been a controversial subject. However, there is a broad consensus among the parties on one issue: It is essential to provide more capital coverage. Professor Dr. Christian Hagist, Chairholder of Intergenerational Economic Policy at WHU - Otto Beisheim School of Management, has dealt with the possibilities of private pension provision on his ÖkonomenBlog.

The pay-as-you-go system of statutory pension insurance alone cannot provide the necessary capital coverage. The German pension insurance system assumes that the relationship between the working population and pensioners will change significantly over the next ten years. If today four gainfully employed persons provide for two pensioners, in 2030 there will be only three to two.

Professor Dr. Christian Hagist describes "company shares as the means of choice to provide for old age in times of demographic change". He sees potential in the Riester pension model, which urgently needs to be reformed. With the abolition of the contribution guarantee, the yield chances could be better used, which might make the private old-age provision attractive for younger people as well.

ÖkonomenBlog

(German version only)