ifo Study: “German Citizen Fund” Could Reduce Pension Gap for Low Earners

The ifo Institute presents the “German Citizen Fund,” a new instrument for strengthening wealth formation and pension provision for the entire population. Such a fund could reduce the pension gap for low earners. The Federal Republic of Germany’s excellent creditworthiness as a debtor enables the country to borrow cheaply and to achieve a considerable yield differential with a reinvestment. As an ifo simulation shows, if the federal government were to invest 0.5% of GDP per year for all people of working age starting today, financed by slower reduc-tion of public debt, the return after 50 years with an average yield differential of two percentage points would amount to a good EUR 16,000 per capita, which could be paid out once a citizen reaches the age of 67.