Tuesday 29 December 2020
36 billion euros reserve
Full pension fund despite Corona
Because of the pandemic, many people are unable to carry out their jobs as usual. This is also noticeable in the wages. But thanks to the short-time work allowance, the pension fund is full even in the Corona year. Nevertheless, retirees will also feel the effects of the crisis.
Despite the corona crisis, the pension insurance closes the year with a reserve of more than 36 billion euros. This sustainability reserve is therefore over 1.5 monthly expenses of the pension fund, said Gundula Roßbach, President of the German Pension Insurance Association. "So far, the pension insurance has come through the crisis lightly." Even November remained positive with 0.4 percent growth in premium income from employment compared to November 2019, according to Roßbach. In April – during the spring lockdown – premium income went down significantly. "But from May onwards they always developed positively compared to the previous year."
The fact that the income situation is relatively stable is also due to short-time work benefits. "Social security is a network," said Rossbach, and it is not just isolated strands. "Our stability also stems from the fact that we receive contributions when we receive short-time work benefits."
From 2020 to November there was an income plus of 0.9 percent for contributions from gainful employment. "In view of the depth of the crisis, this is a remarkable result, even if we have to expect a deficit of 4.7 billion euros at the end of the year, since expenditure will be higher than income," said Rossbach. The Federal Employment Agency and health insurance, on the other hand, have a completely different spending dynamic in the crisis.
Zero wage round will hit the books in 2021
Nevertheless, the crisis will also hit the pensioners. In 2021, for example, the calculation of the annual pension adjustment will result in a zero wage round, explained Roßbach. "Because with short-time work benefits, pension contributions are paid, but this is not a remuneration that is included in the calculation of the 2021 pension adjustment." The zero round is a crisis-related outlier – the pension adjustment is lagging behind the wage development.
"We had sufficient financial resources every month to service all pension payments and other expenses," said Rossbach. "We currently have a sufficiently high reserve that is invested with the banks." The pension insurance does not always put the reserve for one month, but also longer. "We always had to keep an eye on how much income we were getting and how much was needed," explained Roßbach. "That is why we have our liquidity management, and our colleagues there have changed directions."
Due to the consequences of the corona crisis, the pension insurance had to plan with shorter investment times and maintain a larger buffer. "We reacted quickly here. In this way we were able to avoid the federal government having to help out at short notice." Roßbach recalled that the self-administration of the pension insurance requires a higher minimum sustainability reserve than the 0.2 monthly expenditure prescribed today – "in order to always ensure sufficient liquidity, especially in such cases". The pension commission set up by the government also recommended this in its 2020 final report, stressed Roßbach.
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