Germany’s AfD proposes employment pension account for capital market investments | News

The far-right party Alternative for Germany (AfD) is in favour of creating an employment pension account, with employees’ contributions invested in capital markets.
According to the plan, listed as a new sub-chapter of proposals made at the party’s conference earlier this month – titled: Exploiting the opportunities of capital markets – employers can pay a certain share of employee wages, with their consent, into a pension account, before tax, akin to 401k plans in the US.
Capital flowing to the employment pension account would be invested in capital markets through ETFs, funds and stocks, according to the proposal. The employee can add up the full sum of payments made in the employment pension account.
Withdrawals from the accounts are subject to a 50% tax, and withdrawals from the employment pension account before retirement are subject to an additional tax of 25%, according to AfD delegates.
A spokesperson for the far-right party declined to comment on whether the plan to introduce employment pension accounts will be part of AfD’s electoral programme. The party will officially publish its programme at the end of this week, the spokesperson added.
The idea of employment savings accounts signals another shift in terms of pension policies for the party which had as its main goal to strengthen first pillar pensions in its electoral programme draft.
Signs of a shift in pensions emerged recently in a parliamentary inquiry of the AfD backing the social partner model with its defined contribution (DC) plans without liabilities for employers to expand the reach of occupational pensions in small and medium-sized enterprises (SMEs).
The far-right party believes that opportunities offered by capital markets to build up provisions for pensions in Germany have been neglected to this day, it said.
Complex, highly bureaucratic and risk-averse insurance models, like the Rürup Rente, have made capital market investments unappealing for many, according to the proposal made by the party’s delegates.
In reality, private pensions (Riester Rente) contracts have stagnated, while Rürup Rente, know also as basic pension, named after the economist Bert Rürup, a capital-marked oriented private pension product with contributions deducted from taxable income, has grown in popularity in Germany in the last few years.
The AfD is committed to ensuring that, in addition to statutory pensions, every citizen has the opportunity to pay money into tax-exempt individual pension accounts investing in ETFs, funds and equities, with tax-free payouts only possible after retirement, delegates added at the party conference.
It is also in favour of boosting public funding for people buying capital market products through pension accounts investing “largely or exclusively in German equities”, so that “many of our German companies are no longer in the hands of American investment companies or Saudi oil billionaires, but in the hands of the German people”, according to the party’s delegates.
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