Frankfurt, Munich When it comes to the reform of old-age provision in Germany, the traffic light parties are not yet looking into their cards. The top representative of the life insurers drummed all the louder for not postponing the necessary changes in the statutory, but above all in the private pension. “Unfortunately, the last legislative period was a lost time from the point of view of a sustainable pension policy,” says Jörg Asmussen, head of the German Insurance Association (GDV). “Now it has to be readjusted.”
However: What the 55-year-old economist has seen in proposals from the possible new federal government does not go far enough. In the exploratory paper of the traffic light coalition made up of the SPD, Greens and FDP, Asmussen lacks, for example, a sustainable proposal for company pension schemes, which still have too few people in Germany to compensate for the pension gap.
The insurance industry sees opportunities here. Because their traditional product life insurance is under pressure. The persistently low interest rates are gnawing at the return – at least if private investors want to invest with as little risk as possible. Insurers are on fire and have to meet their obligations to customers. A quarter of German life insurers are now under intensified supervision by Bafin.
Nonetheless, Asmussen defends life insurance, saying that it must be further developed with new offers: “The payment of a lifelong annuity speaks in favor of life insurance. The longevity risk cannot be better covered by any product. “
Top jobs of the day
Find the best jobs now and
be notified by email.
Read the full interview here:
Mr. Asmussen, in the case of classic life insurance, the guaranteed interest rate will be reduced to 0.25 percent in the coming year, while inflation of over four percent will weigh on it. Will life insurance finally become obsolete?
Let’s not downplay the product. In Germany we still have more life insurance contracts than residents, with annual contributions of 103 billion euros. However, if the guaranteed interest rate is reduced, the contribution guarantee at Riester and in the company pension scheme must also be reduced. Otherwise the product will get actuarially imbalanced.
Would there be more opportunities for this under a traffic light coalition?
We have to combine security with opportunity-oriented investments in both company pension schemes and life insurance. Our proposal is a guaranteed minimum benefit of 80 percent for the Riester pension. The principle would also be applicable to company pension schemes and direct insurance. So you can invest differently so that more than a hundred percent come out in the end.
Is that enough to change the image of life insurance?
According to the data from the rating agency Assekurata, currently concluded contracts still have an average total interest rate of 2.8 percent. I consider that to be a good return for a safe asset. In addition, the guaranteed interest rate plays less of a role than it used to be due to the switch to new guarantee models or unit-linked life insurance policies. I also consider the current inflation situation to be a temporary phenomenon.
However, around 20 life insurers are under close observation by the Bafin. That’s not an advertisement for the industry.
It is important to note that every customer can rely on the guaranteed performance of their life insurance. We have sufficient capital to meet all existing commitments.
Legacy life insurance policies with high guaranteed interest rates are a burden for insurers. Why are there still so few portfolio sales?
As a former investment banker, I ask myself that sometimes. I think that many life insurers have already done a comprehensive cost-benefit analysis. However, they are complex transactions in which aspects such as reputation also play a role. It is important for customers that life insurers stand by their obligations.
Back to old-age provision in Germany. Doesn’t it have to be completely rethought?
Unfortunately, the last legislative period was a lost time from the point of view of a sustainable pension policy. Now you have to readjust. Two examples: We would have needed a reform of state-subsidized old-age provision. That was part of the previous coalition agreement. Nothing happened. The Riester pension urgently needs reform. It is in need of reform and capable of reform. We need simpler funding that is also understood.
And secondly?
Second, I am concerned with the statutory old-age pension with its four levers: pension level, contribution level, retirement age and tax subsidy. To make the system stable, you have to turn all four adjusting screws. But even in the exploratory program, two of the four adjusting screws have already been completely taken off the table. This leaves only contributions and tax subsidies.
It sounds like you are already very disappointed with the new government in advance.
An exploratory paper is an exploratory paper, it has only twelve pages. But I would have liked a forward-looking proposal for company pension schemes. The basic system is good and correct. We need a proper mix of pay-as-you-go financing for statutory pensions and capital coverage through private and company pension schemes. There is clear room for improvement when it comes to the share of capital coverage.
People with low incomes in particular often lack the financial means for private retirement provision. It would be particularly necessary there. What should happen?
We are open to a simple and inexpensive standard product in subsidized state pension provision. The most sensible innovation in the last legislative period was the introduction of the dynamic low-income promotion. It has brought a lot for people with a gross wage of less than 1500 euros a month.
It is still unclear how the state-subsidized private old-age provision will continue.
(Photo: dpa)
In reality, however, company pension schemes are still mostly something for people in administration and for skilled workers.
I agree with you and caricature it: So far, men aged 55 years in large companies have had a company pension. The diffusion needs to improve.
The so-called social partner model has existed since 2018. Nevertheless, the resulting Nahles pension has not yet been implemented in any company. Is this model dead before it was even alive?
I think the impression is wrong. The first models are about to start. However, everyone involved would have liked a faster implementation, including myself. I would advocate that we also spread company pension schemes in small and medium-sized companies.
What further improvements are needed?
The issue of portability, i.e. the ability to take company pension agreements with you when you change employers, is becoming increasingly important. We have different employment histories today than we did 30 or 40 years ago.
Should the social partner model also be possible for companies without collective bargaining agreements, so that more low-wage earners benefit from it?
Politically it was explicitly wanted. One wanted to strengthen the collective bargaining autonomy.
The lack of care for women is still noticeable. What should change here?
The starting point here is the labor market. Women are still employed to a lesser extent than men today and earn less on average. This is noticeable in the pension. There has never been a generation of women so well educated. This must then also be reflected in the salary and the options for old-age provision.
So we don’t need special models for women?
No. Equal success in the labor market also means equality in pension provision.
The subject of old-age provision is complex. Many people don’t like to deal with it. How can you change that?
We have to improve financial literacy as a whole, even if that sounds banal. Another step forward is the digital pension information passed in the last legislative period, in which people can see their pension entitlements and their pension gap at a glance. As of today, it should go into trial operation in twelve months.
According to the GDV, insured persons can rely on the guaranteed benefits from their life policy.
(Photo: imago / imagebroker)
What should Germany look like in four years?
I hope that we will get a comprehensive pension reform that will make the whole system more sustainable. The next ten to twenty years will demographically be much more difficult than the last ten to twenty years. Of the 83 million people in Germany, 21 million are already of retirement age. This sustainable system consists of all three pillars. The statutory levy remains the central pillar for many people. Hopefully we also have a widespread company pension scheme. There is also subsidized private provision for everyone who is still saving themselves. If you look at different countries around the world, mixed systems are always the most successful in the long term.
Who is the best role model abroad?
Pension systems are always very firmly anchored in a country’s institutional history. It is therefore impossible to highlight a single country as a role model. Some head Sweden, others the Netherlands or Austria. 20 years ago there was also a lot of literature on Chile. This is also subject to certain fashions.
Another personal question: You were involved in daily political affairs for a long time. Would you like to get involved again?
At my age, you only do what you enjoy. And I enjoy my job at GDV.
In Frankfurt there is also an interesting position at the Bundesbank.
I have learned one thing in politics: it is best to stick to the first answer.
Mr. Asmussen, thank you very much for the interview.
More: New business with life insurers is improving again