*** Follow this link to directly register for the online discussion: https://attendee.gotowebinar.com/register/6230800834033341699 ***
I would like to kindly invite you to the next episode of my online discussion series “Europe Calling”, the future of pension products being the next topic. The idea of the “Europe Calling” series is to bring Europe closer to its citizens. The concept is simple but effective: Using a “Webinar” device on your personal computers, hundreds of people can attend discussions on European politics and thus participate in European democracy.
With our ageing populations in Europe, in the late 1990s capital-based investment products gained importance compared to traditional public pension schemes. Since Germany’s pension reform of 2000/2001, for example, private pensions – the so called Riester-Rente – have been heavily subsidized. In recent years, however, Riester-Rente has been severely criticized due to its too low returns and too high fees. Public opinion in Germany considers Riester-Rente a complete failure.
Sweden also introduced a capital-based pillar for its pension system. In stark contrast to Germany, Sweden’s publically run funds is a big success: 6.5% average annual return over 16 years and with costs to investors of about 0,1% per year. Speaking bluntly, the Swedish Premium Pension has a much higher return than the German Riester Rente at ten times lower costs.
How can it be that Sweden is so successful where Germany is failing? The Premium Pension is run by the Swedish Government whilst Riester Rente is a product of private life insurance companies. Is this the reason for the better performance? Is the State really the better investor? Should the Swedish Premium be the role model for pension reform in Europe?
To answer these questions, I invited Mats Öberg (Head of Fund Department, Swedish Pension Agency) and Udo Philipp (Member of the Green working group on the future of the German pension system) to discuss with you key features of the German and Swedish pension systems. Together with you we would like to assess the strengths and weaknesses of these system and to elaborate on what could be learned from these examples to make private pension products more beneficial for European citizens.
Time: 22 February 2017, 15:00-16:00h CET
Participants: Mats Öberg, Udo Philipp, presented by Sven Giegold
Everybody is free to take part from one’s home or office via computer, smartphone or good old fixed line. You can ask your questions via an online chat or get directly involved by posing questions and statements via your microphone. The speakers interact with the audience like in a normal room.
Please, register online to the “webinar”: https://attendee.gotowebinar.com/register/6230800834033341699
On Wednesday 22 February shortly before 15:00h just open the link that you get after the registration. Then download and install the „GoTo Webinar“ device. You can then directly take part in the discussion. Please keep in mind that you will have to use a Windows or Mac computer, Linux is unfortunately not yet supported by the program. If you have any problems, or need technical advice, please contact my member of staff Felix Banaszak via firstname.lastname@example.org or via phone: +49 211 93653011
Background information: The public Swedish pension system consists of three pillars: income-based pension, premium pension and guarantee pension. Whereas the income-based pension is financed on a pay-as-you-go basis (i.e. pension contributions are used to pay retirees of the same year), the premium pension is capital-market based and through the guarantee pension, the government helps citizens with low income.
In regards to the premium pension, Swedish citizens can choose from a wide range of products, in which fund they would like to invest. If they make no choice, their contributions are invested in a default fund. Fund managers who want their products to be eligible under the Premium Pension scheme are obliged to grant a rebate on the ordinary fund management fee. This rebate has effectively contributed to reduce costs for retail investors.
The German pension system consists also of three pillars. The first pillar (pay-as-you-go model) and second pillar (occupational pensions) are complemented by a third pillar consisting of voluntary private pensions. In regards to the third pillar, savers can choose from a wide range of certified products from a multitude of providers of the banking and insurance sector. Savers are obliged to invest a certain minimum amount in this certified product to be eligible for a conditional state funded allowance, which is added to their contributions.
I would appreciate a lot to hear many of you on 22 February! Also, I would be grateful if you could help distributing the invitation. As there is no limit of space, please make as much advertising as possible.