FiveRocks Development SE
How is my money invested for retirement, for example?
Aktualisiert: 12. Feb. 2022
The path of pension contributions via pension funds into "blind pools" and further into the economy next door - an opaque web for those outside the industry.
For many years now, rumors have been circulating about the alleged imminent insolvency of various pension and social insurance funds, which was also instigated by the Federal Financial Supervisory Authority (#BaFin) this year, among others. Also in 2020, #insurance companies seem to be facing financial problems again, as reported by Der Spiegel. Reports of payment difficulties are often accompanied by premium increases or benefit cuts. In its old-age security report on #pension insurance, the German government therefore stated that in 2021 pensions would not increase for the first time since 2015. Labor Minister Heil assured that pensions would never decrease due to the pension guarantee, but adjusted for inflation, pensioners lose enormous purchasing power over a period of time. Meanwhile, cash-strapped pension funds plan to continuously increase contributions from the current 18.6% of gross to 19.9% in 2025, but it remains questionable whether the increase will be enough to stem the progressive #purchasingpower loss of pensions across Germany.
For almost two decades now, the state has been proactively countering the potential disillusionment of incoming pensioners by subsidizing private pension and provision contracts. Probably the best-known examples of these private, but state-subsidized pension programs are the #Riester and #Rürup pensions, which are designed to enable employees to close the pension gap in the future by private means.
The real question, however, is what actually happens to the money paid in? Almost imperceptibly, large sums of money are automatically poured into the social pension funds month after month and are only visible to the employee on the pay slip (e.g. in the case of a company pension plan) or are invested in a private pension from a private account. Very few savers have an overview of the average 6-digit sums they pay into such systems in this way over the course of their lives. Finally, all pension funds, statutory and private, reinvest the money paid into the #economy: in #bonds, #stocks, #companies, #real estate, renewable energy, etc. While pension funds are on the one hand strongly regulated by law in their #investment horizon, the investments made by the funds remain a secret for the original owner of the money, the contributor providing for the pension. Control over his money saved for retirement thus lies entirely with the pension funds, which not infrequently make #investments that the private investor would neither support nor ever make on his own.
The form of large-scale investing is basically similar to the "blind pool" practice known by the name in the fund industry. In the #fund world, #BlindPools in the conventional sense refers to closed-end funds that collect money in large amounts from often small investors and reinvest it profitably. Here, the fund pursues a specific #investment strategy. If the fund calls itself a #real estate fund, for example, the investor can assume that the fund will invest the investor's money in real estate or #real estate development projects, but not where and in which buildings it will invest. Whether the investments made are office buildings in Munich, retail space in Berlin or apartment blocks in Hamburg, the investor does not find out. Only recently such a story landed in the press, in which a married couple was invested in a #Real estate development fund, which planned the demolition and the resettlement of a residential area in the context of its purchase strategy. However, the couple was settled in this residential neighborhood and was unaware of the background of the forced relocation.
The lesson from this widespread investment and investment practice in the market from the perspective of the private investor should be to ensure the highest possible #transparency in their own investments. In the midst of the opacity of the financial world and the partly worrying reports of the pension funds, however, hopeful #investor models are sprouting, which also enable #small investors to gain a higher insight into the investments made. The attractiveness of investments in concrete projects is increasing among the general population.