You are right about that. However, the problem is not just the short-sightedness of governments. Our entire social system is built on the production factor labor. This now becomes a double problem. On the one hand, demography is unfavorable; on the other hand, the capital factor has performed significantly better in recent decades. The Riester pension originally aimed somewhat in that direction, and people were supposed to build up a pension on the capital market in addition to the statutory pension insurance (GRV). Unfortunately, in Germany we basically consider the stock market to be as much of the devil as personal responsibility and have focused on how to protect people from losses. What resulted was a state-subsidized pension provision through insurance (after all, professionals make the decisions there!) and with a contribution guarantee (who would invest in something that pays out less in the end?). In doing so, it was ignored that, on the one hand, professionals do not make better decisions, that they generate a lot of costs, and that the guarantee leads to 90% of the portfolio being tied up in government bonds due to low interest rates. In the end, a return of almost nothing comes out, and that before costs. A similar problem exists with occupational pensions (BAV). A construct similar to a 401k would be far superior.I actually wanted to point out that demography is not the root of the problem, but that the productivity growth of recent decades(!) has not proportionally ended up in the pension fund. Demography is an aggravating factor, not the cause.
Change things for a different climate. Australia simply has the exact opposite focus compared to Germany. Namely, you have three seasons where you want to get the heat out of the house as quickly as possible, and in winter you just throw another blanket on. That also has different advantages or disadvantages. For example, if I want to lay another cable, I don’t have to tear open the entire wall. But I also have to admit that there are no strict standards for house construction in Australia. I have friends who get upset about that. The fact that, with climate change, Germany’s weather is moving more towards Australia’s, I find quite striking. I don’t find it so bad; with the low humidity here, it is actually better than in QLD. However, I insist on having air conditioning in our houses because I see how my mother copes with the heat there at an older age. You can also see this with the heatwaves in recent years in France, etc.Residential property, in my opinion and from my experience in Queensland, is rather poor quality in substance (thin timber framing with single-layer plasterboard).
True.You are right. However, the problem does not lie solely in the short-sightedness of governments. Our entire social system is built on the production factor labor. This now creates a double problem. On the one hand, demographics are unfavorable, on the other hand, the capital factor has performed significantly better over the past decades. The Riester pension originally aimed somewhat in that direction, and people were supposed to build up a pension on the capital market in addition to the statutory pension insurance (GRV). Unfortunately, in Germany we actually regard the stock market as devil’s work just as much as personal responsibility, and we focused on how to protect people from losses. The result was then a state-subsidized pension provision via insurance (after all, professionals make the decisions there!) with contribution guarantees (who would invest in something that ultimately pays out less?). In doing so, it was ignored that on the one hand professionals do not make better decisions, that they incur plenty of costs, and that the guarantee in times of low interest rates leads to 90% of the portfolio being stuck in government bonds. In the end, you get a return of almost nothing—and that before costs. Similar problems exist with occupational pensions (BAV). A construct similar to a 401(k) would be vastly superior.
Fair enough ;)
I actually wanted to point out that demography is not the root of the problem, but that the productivity growth of recent decades(!) has not proportionally ended up in the pension fund. Demography is an exacerbating factor, not the cause.
And having more children may ease things in 20+ years, but before that they have made things worse for two decades.
It’s easier said than done - in multiple respects.
The stock market route has two major advantages over a levy: 1. you are not limited to Germany. You can decouple yourself from the local competitive disadvantages. 2. Companies are very creative in avoiding levies and playing states off against each other. The saved money, however, always flows to the ownersBut what does it ultimately come down to? In the end, the productive power of tangible assets is supposed to contribute to retirement provision. Either through the stock market route or through the route of state insurance, if one also subjects the profits of a pension contribution. In both cases, the earnings of the companies have to pay for it – and always according to the procedure of a pay-as-you-go system, ei der daus.
I think one has to distance oneself a bit from volatility. It is now fairly widely accepted that an annual withdrawal rate of about 3.5% of the peak value no longer poses a relevant risk of premature failure. As an end result, you get a regular cash flow, the rest are just numbers in the account. Furthermore, of course, not everything would be shifted to private provision and funded systems, not even the Americans do that. That takes a lot of the sharpness out of the matter againFor planning security, the state route speaks, for personal responsibility, the stock market. Personally, I believe that retirement provision with small pensions is not something that should be subject to volatility, but that can be viewed differently.
