(Bloomberg) -- Germany’s ruling coalition published plans to secure state pension financing over the longer term, including establishing a fund for investing in stocks worth at least €200 billion ($217 billion) by the middle of the next decade.

That asset hoard, which will be administered by an independent public foundation, will be backed by loans taken on by the federal government, as well as the proceeds from the sale of state holdings, according to the finance ministry in Berlin.

Investment proceeds should flow into the pensions system from around 2035 and are intended to help keep payments stable at 48% of income at least until the end of the next decade, while easing the burden on employees and the federal budget.

Finance Minister Christian Lindner and Labor Minister Hubertus Heil presented the proposals at a news conference Tuesday, part of the ruling alliance’s push to retool Germany’s social security system to cope with an aging population.

“The system must remain fair for future generations,” Lindner told reporters. “We should have done this 20 years ago,” he added, lamenting that Germany had ignored the potential of capital markets for too long.

There was mixed reaction to the proposals, with some commentators saying they’re a solid start but that much more needs to be done.

“Politicians continue to turn a blind eye to the major challenges facing old-age provision in Germany,” Christof Quiring, head of workplace investing at advisory firm Fidelity International, said in an emailed statement.

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While he welcomed the establishment of the investment fund, he cited calculations by the IW Institute in Cologne that suggested it would need to be more than four times larger to cover the expected jump in costs.

“We must take further measures immediately to save the pension system from collapse,” Quiring said. “This includes broadening pension provision and making occupational and private pensions more attractive.”

Chancellor Olaf Scholz, whose three-party ruling alliance has seen its poll ratings slump in recent months, hailed the plans, saying it’s “a question of decency and respect” to prevent pensions from falling below a certain level.

“Respect, by the way, not only for current pensioners,” Scholz said in a video message published Tuesday. “But also toward those who still have the majority of their working life ahead of them.”

Further details:

  • Aim is to get parliamentary approval for the measures before the summer break
  • Starting in the mid-2030s, an average of €10 billion will flow annually from the fund into the state pensions system
  • Germany doesn’t want to cut pensions or raise the retirement age, Heil said
  • This isn’t yet the solution for a long-term pension system, Lindner said

(Updates with Scholz comments, reaction starting in seventh paragraph)

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