What's new in 2022? Germany's new plans for pensions and savings

The new government coalition wants to reform the private pension system, float the state pension on the stock market, and get more people into home ownership.

This Article in Brief

What the new government plans for the finances of German citizens
Old-age pension plans, in particular, will become even more complex. Statutory and private pensions face reform
If you don't want to lose track of things, you should definitely seek advice from a financial coach

„Mehr Fortschritt wagen“ - "Dare to be more progressive" That's the motto for the new government's coalition agreement setting out the cornerstones for its work. There are also to be some changes in pensions, savings and other areas. Here's an overview:

Entry into the stock market-based pension

The coalition does not want to cut pensions or raise the retirement age. But it must do something about the growing gap in the financing of the statutory pension. A stock market pension based on the Swedish model is expected to solve the crisis: in 2022, the German pension insurance fund will initially receive ten billion euros from tax revenues and invest the money in the stock market. However, critics complain that the amount is not enough to ensure adequate pensions for the baby boomer generation.

The coalition agreement states:

>>Neben der gesetzlichen Rente bleiben die betriebliche wie private Altersvorsorge wichtig für ein gutes Leben im Alter.<<

>>In addition to the statutory pension, both occupational and private pension plans remain important for a good life in old age.<<

Source: Coalition contract between SPD, Bündnis 90/Die Grünen and the FPD

Private pension reform

The new government has announced its intention to "fundamentally reform" private pension plans. In the coalition agreement, it has set out the following, among other things:

Private pension üplans with the stock market:

The establishment of a sovereign wealth fund, similar to the state pension scheme, is to be examined. Anyone who does not want to pay into the fund would have to actively opt out.

State subsidies:

The SPD, Greens and FDP want to examine which high-yield private investment products could be given state approval. Incentives should be created for people with lower incomes in particular to use such subsidized solutions.

Riester pension:

"Current Riester contracts will be grandfathered," according to the coalition agreement. This means that those who already have a Riester pension can continue to enjoy the benefits, including state subsidies.

Company pension plans:

These are to be strengthened, among other things by allowing investment opportunities with higher potential returns in the future.

Self-employed:

In the future, they will be obliged to provide for their old age. Newly self-employed persons who do not pay into a mandatory old-age pension scheme will be able to choose between statutory and private pension provision. A subsidized private solution will also be open to them.

Saver's allowance:

The savers' lump-sum allowance will increase from 801 to 1,000 euros per year for single persons (married couples: 1,602 and 2,000 euros, respectively). This gives savers and investors more scope for tax-free investment income such as interest or income from investment funds.

Simplifying real estate purchases

Home ownership:

More people should be able to buy their own homes. This could be achieved through the use of private equity-replacing loans. Lower-income households should be supported in purchasing property, e.g. with repayment subsidies and interest rate reductions.

Property tax:

The federal states should be given greater flexibility in structuring land transfer tax to simplify the purchase of owner-occupied housing.

Better coverage for long-term nursing care expenses

Aged care expert panel:

A panel of experts is to present proposals by 2023 for voluntary statutory long-term care insurance that covers long-term care costs in full.

Private aged care and nursing insurance:

Private long-term care insurance is to be given a comparable option.

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