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Shun State-Backed Private Pensions, Institute Says
August 19, 2003
Aug. 19 (Bloomberg) -- Germans
are shunning government-backed private pension plans introduced in 2002
and designed to reduce people's reliance on state retirement benefits, the
DIA Institute for Pension Insurance said.
The number of people investing
in private pensions fell to 5 million in the first half of the year from
5.1 million in 2002. Some 300,000 pensions plans were canceled, exceeding
the 200,000 new contracts signed in the first six months, the DIA said.
``The never-ending debate about
welfare cuts is prompting people to back off from higher investments,''
said Markus Jaehnig, a spokesman for the DIA, sponsored by Deutsche Bank
Chancellor Gerhard Schroeder
last year introduced subsidies and tax breaks worth $9.5 billion for
people taking out private coverage. Some 23.5 million retirees among
Germany's 82 million inhabitants rely on state pension payments.
Germany's biggest life insurer, last year sold 534,000 so-called Riester
pensions, named after the former German labor minister, Walter Riester,
who steered the pensions tax breaks through parliament. The government
estimates 20 million Germans are eligible.
Schroeder, under pressure to
renovate a pension system strained by the dual burden of rising life
expectancy and a shrinking workforce, is considering freezing pension
benefits and raise the retirement age to rein in growing costs.
An advisory panel led by wise man Bert Ruerup will present its recommendations on changes to the pension system next week.