Transparency for Old-Age Provision: The Digital Pension Platform

The German Federal Cabinet plans to introduce a digital pension platform, having already adopted a draft law to this end. An information portal will be set up under the German Pension Authority (Deutsche Rentenversicherung Bund) in order to cover all three pillars of old-age provision, namely statutory, occupational, and private. The portal should be able to show how much money you have saved and what monthly pension payments you can expect at retirement. In the latest episode of the #ZEWPodcast, ZEW economist Professor Tabea Bucher-Koenen talks about why a digital pension platform is important and how knowledge about financial topics affects saving for old age. While the first three editions were published in German, there are plans to produce English editions of the podcast as well.

In the #ZEWPodcast “Wirtschaft · Forschung · Debatten”/“Economy · Research · Debates”, head of the ZEW Research Department “International Finance and Financial Management” Professor Bucher-Koenen notes how the introduction of a digital pension platform in Germany is a milestone. “This is an incredibly important step towards more pension transparency, a greater overview, and better support regarding old-age provisions,” she explains. A similar digital information platform is already available in countries such as Sweden, the Netherlands, and Denmark, where people feel better informed. This is also in line with the results of a study among German bank customers, which Professor Bucher-Koenen was involved in. “What we found was that especially people who previously had little financial knowledge tended to adjust their savings behaviour afterwards.”

Professor Bucher-Koenen’s research focuses intensively on questions regarding financial literacy. “If you look at the link between financial literacy and private pension provision, you can see that people with lower financial literacy, on average, also plan their old-age provisions less thoroughly,” she adds. “There definitely are hurdles to be removed and we have to think about how to successfully reach these people, what instruments to use to approach them, and how to simplify things so that they don’t feel overwhelmed by a flood of information and a certain complexity that naturally comes with the subject.” Mastering this communication challenge is a huge task that requires much further research, according to Professor Bucher-Koenen.