Isn’t it therefore essential that we attribute more discussion to the question of how retirement provision can be linked to other pressing issues? Issues such as the transformation of the economy in Germany, Europe and worldwide, and the financing of business start-ups? Investments in infrastructure, for example, could be an excellent link; due to the long-term investment horizon in retirement provision, the achievement of higher returns by entering into long-term capital commitments (and the associated illiquidity premiums) appears particularly promising. This is demonstrated by innovative examples at the intersection of asset management and life insurance.
Surprisingly, some argue that mandatory standard products would promote the investment and equity culture in Germany and contribute to financial education and wealth accumulation among the population. However, strengthening financial education through a compulsory system does not appear to be the best route. There are more effective approaches to tackling financial education and investment promotion in Germany. One example is the promotion of employee share ownership in companies, which builds up assets in the long term and strengthens employee loyalty.
Based on the report and commentary, we should contrast and discuss other aspects of reform in the context of the debate around the Swedish model:
- Strengthening of funding and reduction of guarantees in both pillars of supplementary pension provision, i.e. in both occupational and private pension plans – this would allow more freedom and broader inclusion of alternatives in the capital investment
- Streamlining of Riester regulations and opening them up to new and more competitive forms of investment
- Promotion of financial education and consistent digitization of processes and systems (including a digital infrastructure for the dissemination of old-age provision to better target young people)
- Addressing how the necessary investments in the upcoming transformation process can be linked to retirement provision
This latter is of the utmost importance. It would be worthwhile to hold a broad debate on the topic, with a view to implementing future-oriented measures that allow for the targeted development of old-age provision, while also linking to the major future issues of our time.