A Public TV Problem

In Germany, you have a mandated public pension program that everyone puts money into, and will receive a monthly check upon retirement.  If you work for a higher-class company, you could have a private pension deal as well.  This means you walk away at retirement with the public pension amount, and the private pension amount.  It's safe to say....these people do well in retirement and don't  really  notice much of a difference in their retirement situation (compared to the regular working-class folks).

This business story came up today via Focus (the German news magazine) on ARD (German public TV).  ARD runs the massive Baden-Baden Pension Fund (since 1997) as a private pension program for all public TV/radio employees.

ARD, because of a low-interest rate situation....is having a problem in generating enough profits.  Starting in 2020, it's anticipated that the paying interest rate will be near 1.75 percent.....which you can imagine, for a pension program....creates long-term issues.

So there is chatter going on that the TV/Media Tax will have to go up and part of the required increase, will involve paying more into the retirement fund.  A problem?  You'd have to get this past the various state legislative fronts (all sixteen) to increase the TV/Media Tax.  If the general public figures out this situation and that some portion of the 1 to 2 Euro increase is about private pensions?  Man, that would hype up the general public and make them ask why they have to pay for the private pension.

What's likely to happen?  If the German state legislatures don't agree to an increase on the tax.....the ARD folks will have to react, and probably start to decrease the amount of monthly checks.  A five-to-ten percent cut?  That might occur with only mild frustration.  A thirty-percent cut on these checks?  Well....that would set off some significant frustrations.  My guess is that some scale will be created, with the hefty pension earners....being hit with a 30 to 40 percent cut, and the lesser pension earners will only see a 5 to 10 percent cut.