Pension Commission: Fact-Checking 33 Recommendations—3 of Which Are Considered Critical from the Insurers’ Perspective (Article in German)

Article in english (google translated for your convenience):

# Pension Commission: 33 recommendations fact-checked – 3 of which are critical from the insurers’ point of view

The pension commission today presented its 33 recommendations for the future of old-age security in Germany. The German Insurance Association (GDV) welcomes the general direction of the proposals. However, the association finds proposals that would concentrate additional pension provisions more heavily in state-run structures particularly problematic.

—

From the association’s perspective, the commission is providing important impetus for making retirement provision more resilient to demographic changes in the long term and for strengthening funded pension components. The GDV (German Insurance Association) views the vast majority of the recommendations positively or as fundamentally sound. The association finds proposals that would concentrate additional pension provision more heavily in state-run structures particularly problematic. 

“More capital funding in retirement provision is the right approach. The crucial question, however, is how it is organized. The more pay-as-you-go and capital funding are concentrated in the same institution, the greater the political influence on investment decisions. This weakens the system in the long term,” says Moritz Schumann, Deputy Managing Director of the GDV.

# However, the GDV has clear reservations about three recommendations:

A statutory capital-based pension system modeled on the Swedish system would introduce an additional, state-administered scheme alongside the existing pillars. This carries the risk of political interference in capital investment, creates new bureaucracy, and could weaken the competitive expansion of funded pension schemes. While greater funded pension provision is fundamentally correct and necessary, the establishment of new state-run pension structures is not required. From the German Insurance Association’s (GDV) perspective, policymakers should therefore prioritize strengthening existing occupational and private pension structures. Product expertise, regulation, advisory services, and infrastructure are already in place within these systems.

Against this backdrop, the early retirement pension should not be designed as a supplement to a statutory capital pension. From the association’s perspective, the purpose of the early retirement pension is not for children to contribute to the statutory pension insurance at an early age, but rather for them to build up privately organized retirement savings from a young age. Its aim should be to introduce children and young people to capital-funded retirement savings at an early stage, to enable them to build up their own pension entitlements, and to contribute to their financial literacy. This works best when parents and young people have freedom of choice and private providers compete. A one-sided steering towards a state-run system would not contribute to greater diversity and, above all, would not contribute to financial literacy, as the state would be sending the signal: We’ll take care of it for you.  

The association also has reservations about the recommendation to make statutory pension insurance mandatory for newly self-employed individuals without an opt-out option. Many self-employed people already make their own provisions for retirement, utilizing flexible pension solutions tailored to their individual circumstances. This freedom of choice should be preserved.  

The GDV has summarized the individual assessments of all 33 recommendations in a detailed fact check.  

# Recommendation 1: Net replacement rate of 70 percent as a political target

**GDV assessment: Generally sensible**

A study commissioned by the German Insurance Association (GDV) and conducted by the German Institute for Economic Research (DIW) found that people desire 78 percent of their last net salary as their retirement income. A minimum of 58 percent was determined to be sufficient to make ends meet. Therefore, from the GDV’s perspective, the net replacement rate is a sensible target figure, as it focuses attention on the actual level of retirement income. However, it is crucial that the 70 percent figure be understood as the overall retirement income target, encompassing all three pillars of the pension system. Attributing this rate solely to the statutory pension system raises expectations that the system cannot meet and overlooks the necessity of occupational and private pension schemes.

# Recommendation 2: Regularly report the net replacement rate

**GDV assessment: Positive**

The transparent presentation of the overall level of pension provision, including all three pillars, is expressly welcomed from the GDV’s perspective. It makes clear what the statutory pension alone can provide and where occupational and private pension schemes must necessarily supplement it.

# Recommendation 3: Further develop indicators for monitoring retirement provisions

**GDV assessment: Positive**

A better data foundation and more advanced monitoring are generally positive developments. It is important that the monitoring covers all three pillars equally and comprehensively. Only in this way can gaps in care be assessed and which policy measures are truly effective.

# Recommendation 4: Further develop the digital pension overview as a planning tool

**GDV assessment: Positive**

The German Insurance Association (GDV) expressly supports the further development of the digital pension overview into a genuine information and planning tool.  

# Recommendation 5: Link the standard retirement age after 2031 to life expectancy

**GDV assessment: Generally sensible**

A standard retirement age linked to life expectancy is demographically consistent and, from the German Insurance Association’s (GDV) perspective, unavoidable in the long term. The proposed 2:1 ratio between working life and retirement is a balanced approach that distributes the burden fairly.  

# Recommendation 6: Abolish the option of retirement without deductions for those with particularly long contribution periods.

**GDV assessment: Positive**

From the German Insurance Association’s (GDV) perspective, this is a logical and long overdue recommendation. Early retirement schemes without deductions place a burden on the insured community and create perverse incentives for early retirement. Their abolition is a necessary step towards greater intergenerational fairness and the long-term stabilization of the system.

# Recommendation 7: No pension scheme based solely on years of contributions

**GDV assessment: Positive**

A regulation that relies solely on years of contributions and ignores increased life expectancy would place a disproportionate burden on younger generations and further jeopardize the system’s financial viability. The recommendation is sound and consistent.

# Recommendation 8: Raise the retirement age for long-term insured persons from 63 to 64 years

**GDV assessment: Positive**

Raising the possible retirement age from 63 to 64 is positive, as it increases labor force participation and relieves the burden on the German statutory pension insurance (GRV).

# Recommendation 9: Calculate and update conversion factors using actuarial methods.

**GDV assessment: Positive**

Raising the retirement age in combination with actuarially correct deductions strengthens labor force participation.

# Recommendation 10: Scientifically support case management and preventive healthcare

**GDV assessment: Generally sensible**

A sensible complementary measure. Those who can work longer in good health strengthen the contribution base and relieve the burden on the pension fund. Close scientific monitoring ensures that the impact and costs of these measures remain transparent and that adjustments can be made if necessary.

# Recommendation 11: Adapt survivor benefits to social reality

**GDV assessment: Has potential**

It depends on the specific details. Pension splitting combined with the abolition of widows’ pensions could relieve the burden on the statutory pension insurance system. Those who wish can also arrange private pensions for their surviving dependents.

# Recommendation 12: Align the rehabilitation budget in the German statutory pension insurance scheme (GRV) with actual needs

**GDV assessment: Unclear**

The effects of this measure are unclear. Costs and benefits must be consistently considered when designing the rehabilitation budget.

# Recommendation 13: Raise the age limit for partial retirement to 58 years, abolish the block model

**GDV assessment: Positive**

From the GDV’s perspective, this is consistent and correct. In practice, the block model of partial retirement has primarily served as an early retirement instrument and has incurred considerable costs.  

# Recommendation 14: Reactivate the sustainability factor, increase alpha to 0.33

**GDV assessment: Mostly positive with reservations**

The sustainability factor is the key instrument for fairly distributing the burdens of demographic change between pensioners and contributors. Its politically motivated suspension was a mistake. We view its linkage to the capital-funded supplementary pension scheme in the statutory pension insurance scheme critically.

#