Evaluation is too one-sided and should be revised --Dock (user: Geisslr) 18:43, 9 April 2005 (CEST) the capital covering procedure is a method to guarantee achievements from insurance. The contributions of the insured ones at the capital market are put on and formed for each individual insured one covering capital, which covers the achievements which can be paid. All current and future requirements are covered by this covering capital in appropriate height. The yields obtained at the capital market are considered in form of interest charges of the contributions. For the administration of the funds as well as the risk costs result, which are taken off from contributions and/or yields. The formation of the covering capital is usually legally regulated. The capital covering procedure is a procedure for individual insurance: Each Versicherte is led as own account, whose height is determined exclusively by the own contributions.

Private life insurances use a capital covering procedure. The covering capital is paid off after maturity as unique sum or as lifelong insurance benefit.

In contrast to this with the allocation procedure no covering capital is formed, but the deposited insurance premiums are spent immediately again on the requirements already developed.

To Germany in the course of the pension reform 2001 with the Riester pension in such a way specified a private precaution insurance tax-privileged which is based on Kapitaldeckung and was introduced, which was to make it possible to adjust by private savings achievements shortening the pensions of the legal old age pension insurances. The legal old age pension insurance uses the allocation procedure.

Evaluation

Advantages

The advantages capital covering procedures are from view of the proponents:

• The capital covering procedure depends less due to world-wide capital markets on the national demographic development.
• Each contribution payer saves for his own pension, which precipitates by compound interest effect (to wage-increase-dependent) (except with value purge) more highly than a bare equivalent of the deposited contributions, which with the present allocation procedures "“dynamisierten"” only in case of rising wages the case are.
• Everyone can be pensionable age individually to determine.
• Uncoupling of the rate of contribution of the earned income can lead to the lowering of the employer-lateral ancillary wages.

Criticism

Opponents capital covering procedures argue as follows:

Often it is assumed that by the change from the reallocation to the capital covering procedure within the legal old age pension insurance a discharge of the future contribution payers is attainable. The central question thereby is whether the load of a future "„pensioner mountain can be moderated"” by the formation of a capital stick, without - as in the allocation procedure - which contributions increased or which would have to be lowered pensions.

Those in each case employed person generation must do always in favor of the pensioners without parts of the overallally economic available goods volume, independently of the Finanzierungsverfahren. A capital fund can increase at the most the future growth rate and thus the entire national product available for distribution purposes. In the necessity for the change of the income relation between the generations change thereby for nothing, only it is simpler not to finance from an increasing national product the rising requirements the no more employed person generation.

According to opinion of the critics the formation of a capital fund would already cause overall economic problems. With shrinking population away a rise of the economical saving and investment ratio is necessary during a longer period, if the supply of the future strong pensioner classes from an additional growth is to take place. The attempt to save overallally economic increased can fail however. It is connected not only with a double load of the contribution payers in the transitional phase, but also with a decrease of the consumer goods oh question, which so easily by more investments one do not compensate. The higher planned savings possibly lead the inquire-conditioned degradation of the sales prospects to reductions of the rate of interest, but might these investments energizing effect hardly make up for. By balance therefore a decrease of the operating profits is to be expected, if it comes not even to production and occupation losses. Both is hardly suitable to animate the investment activity; rather already an investment decrease and thus the opposite of the hoped for effects could occur.

Even if the formation of a capital fund without substantial growth losses were possible, its future discharge effect remained uncertain. With rising pensioner number a partial dissolution is necessary, which increases the capital market offer and which value of the fund reduces possibly strongly. By Entsparen steige besides the consumer goods oh question. In the case of full employment price increases result, i.e. the employed persons are forced to a material consumer renouncement over higher prices instead of over higher contributions. Also the inflation process would contribute to a further cancellation of the capital stick.

Besides the capital covering procedure is not secured against very large or global crises: During the two world wars if such a procedure would have existed in Germany, then it would have broken down by the following in each case times of inflation.

The transition to the capital covering procedure does not increase in the long run also the economic security of future pensioner generations, thus no solution of the demographically caused problems represents from view of the opponents and critics due to the associated overall economic risks.

See also: Capital reallocation principle, capital covering principle, Mackenroth thesis

Articles in category "Capital covering procedure"

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