Description

An agricultural pension insurance scheme can form part of the general pension insurance system. It provides self-employed farmers with at least a basic old-age pension when they reach retirement age or if their earning capacity is reduced. Pension insurance schemes may ease the lease or giving up of farms during structural change and reduce small and medium-sized farms’ dependence on the next generation. At the same time, it allows businesses to develop and innovations to spread by accelerating the switch from the older to the professionally trained younger generation.

Premiums are graduated based on the size of the farm, although the amount of the basic pension is the same for all farming families. Each farmer has an individual entitlement to the pension. Nonetheless, these basic provision supplements usually do not fully replace farming families’ private pension arrangements.

In the initial stage of a professional liability insurance policy, the state can provide subsidies so that immediate pension payments can be made. Permanent subsidies can also be provided. This may be necessary in order not to overburden young farmers, particularly in areas where the agricultural sector is undergoing major structural change.

Requirements

• A properly functioning country-wide administration and monitoring system with access to the relevant information and sufficient technical and human capacities for its design, implementation and monitoring
• (Emerging) Insurance industry
• Close cooperation and knowledge sharing with farmers' organisations
• High proportion of the working population formally employed
• Interest and motivation of young people to enter the agri-food sector
• Open-access to all farms, regardless of size and location
• Skilled / specialised personnel to man the respective institutions / provide the respective services
• Willingness of the older generation to pass on the farm

Possible Negative Effects

• Traditional intergenerational care loses its significance