Pension crisis for doctors: pension funds are facing drastic cuts!

Pension crisis for doctors: pension funds are facing drastic cuts!

The German pension system is showing increasingly worrying signs of instability, particularly for pensioners working in eligible professions such as doctors, lawyers and architects. These professional groups have to take out insurance in special pension funds that are financially dependent on membership contributions because they do not receive any government subsidies. This development is reported in a report by Mercury presented in detail.

The pension funds invest membership contributions in stocks and real estate in the hope of generating returns. An example of this is the pension fund of the State Medical Association of Hesse, which is affected by significant losses due to problematic real estate financing. Research by Handelsblatt shows that further extraordinary depreciation is to be expected in 2024, which could further aggravate the already tense situation on the real estate market.

Criticism of the pension funds

The crisis is also reflected in the fact that the pension fund of the State Medical Association of Hesse ended a year with negative results for the second time in its more than 50-year history - the first time was in 2008. Despite these difficulties, the number of active members rose from 36,506 in 2022 to 37,650 in 2023. However, experts warn that reductions in benefit commitments are possible because there are no guarantees in the pension funds.

International reports and analyzes such as those from Investment Week, also show that pension increases in pension funds often lag behind general inflation. One example is Günther Wohmann, whose pension increased by just under 8% in 15 years, while his wife's statutory pension increased by 36%.

Financial burdens and possible solutions

The performance of the pension funds is impaired by a persistent phase of low interest rates, which has hardly provided many pension funds with sufficient returns over the last 20 years. Reports show that some pension funds have implemented pension adjustments of less than 1% per year for years. Pharmacists and dentists in particular are suffering from this development, as many of them have not received any increase in their pensions, whereas they would have benefited from higher increases in the statutory pension insurance.

The reasons for the financial difficulties are varied. A lack of government subsidies, capital market turbulence and a lack of transparency regarding investments and pension adjustments contribute to the uncertainty. Offers for better protection in the event of occupational disability or survivors' benefits cannot outweigh the benefits provided by the pension funds.

While experts consider a complete collapse of pension funds to be unlikely, some have already had to cut pension payments. A southern German pension fund reduced pension payouts by 3% in 2023. Future scenarios, such as increases in contributions or further pension cuts, do not seem to be ruled out and cast a shadowy light on the retirement provision of many people working in the relevant professions.