Is private or employee benefit pension provision worthwhile today?
by Alexander Beard, on Aug 14, 2019 12:39:53 PM
For more than 35 years I have been hearing the same question again and again: “Is it worthwhile for me (or our employees) to do something for my (their) retirement provision?” One is coupled with the fear of not being sure that one's own job can be kept, the other with the argument of low interest rates from the FED, ECB, BoE or BoJ. The argument that the costs and effort for the administration are far too high or that the contribution to the KVdR on benefits from the company pension is purely a rip-off is repeated time and again.
Well, all right and important considerations. And I am far from giving “General tips"; for everyone! Nevertheless, almost every week there are articles in the media that Germany is desperately in need of skilled workers, that companies are competing for the best employees and that even small and medium-sized businesses or especially smaller companies lack models for employee retention. Or that poverty in old age would inevitably roll towards us.
The reason for this is the entry of the baby boomers into retirement age and the low birth rate, which cannot be compensated by immigration. Even though immigrants are 90% younger than 40 years of age and somewhat relieve the social security systems in the medium term. The total population of Germany will therefore shrink by 4 to 6 million people by 2035. Never before have had more people lived in Germany than today: more than 83 million. Over the next three decades, the number of people aged 80 and over will increase from 5.4 million today to 10.5 million.
The employee benefit pension scheme is not a panacea, nor is it a guarantee that good employees will only transfer to a company or remain there for this reason. But it can become a small piece of the mosaic, which can also make the difference. If it is possible to set up a group contract (e. g. right now, when implementing the BRSG*), the costs are extremely low, the underlying capital investments of good providers are also very widely spread at low premiums.
The most important thing, however, is to encourage entrepreneurs and their employees, on the one hand, and their private environment, on the other, to actively take their own pension provision into their own hands in addition to the statutory one: on average, we will all live about 15 years longer than our grandparents' generation! Even if the retirement age has been postponed by 2 or 3 years, this will by no means be enough to maintain the standard of living achieved from the statutory pension alone.
Our team supports you. Not only private individuals but especially small and medium-sized companies. Just come up to us. Because we have a clear answer to the question we asked at the beginning, and it's “YES!”;
Member of VdW, VEMA: firstname.lastname@example.org.
*) BetriebsRentenStärkungsGesetz, in force from 01/2018 on.
Country Manager - Germany (AB International Benefits B.V.)