The pension policy of the traffic light coalition leads to a strong additional burden for the younger generation. This is shown by calculations by the Research Center for Generational Contracts at the University of Freiburg, which are exclusively available to WELT AM SONNTAG. The plan laid down in the coalition agreement to keep the pension level stable at 48 percent of average earnings beyond 2025 is driving up the costs for future taxpayers and contributors.
The additional financial requirements of the pension insurance add up to 1.56 trillion euros, as the research team led by finance scientist Bernd Raffelhüschen calculated. The implicit government debt hidden in the social security fund would rise by 43.6 percent of gross domestic product (GDP) in one fell swoop.
The implicit debt indicates what amount the state would have to build up as a reserve today if it were to finance future expenditure without increasing levies or taxes. A company would have to build up financial reserves to finance such an annuity promise. However, the state does not save significant reserves for pensions, nursing care or health insurance or for civil servants’ pensions.
The implicit debt in 2021 was more than double the officially reported government debt, which is around 75 percent of GDP. The Market Economy Foundation will publish the current generation balance with the total debt in the coming week. Raffelhüschen criticized the planned safeguarding of the pension level as a “breach of fairness between the generations”.
It would be fair if each generation paid the same percentage of their wages to finance pension insurance, said the economist. In Germany, however, young people would have to pay a far higher share of their wages for pension insurance during their working life than their parents and grandparents.
With the permanent stop line at the pension level planned by Federal Labor Minister Hubertus Heil (SPD), the burden sharing previously applied in the pension system will be abandoned. So far, the sustainability factor in the pension formula has ensured that the consequences of demographic change are distributed more or less equally between young and old. Because fewer and fewer contributors will have to support more and more retirees in the future, pensions should rise somewhat more slowly than wages.
The stipulation of the pension level planned by Heil means the end for the sustainability factor. Pensions then rise at the same pace as wages. And the worse the ratio of contributors to pensioners, the higher the contribution rate and tax subsidy to the pension fund must be.
In its monthly report, the Bundesbank warned that when the pension level was fixed, the contribution rate would rise from the current 18.6 percent to 29 percent by 2070. In addition, additional tax funds would be required to an extent that corresponds to six percentage points of value added tax.
Employer President Rainer Dulger also considers a permanent pension level of 48 percent to be unaffordable. Because by the end of the next decade, the contributions would then have to rise to more than 25 percent. “That would not only be a complete overtaxing of the contributors. It would also mean passing on all the burdens of demographic change to younger people alone.” However, what is needed is a generation-fair pension policy that distributes the burden fairly, said Dulger.
The coalition has agreed to contribute ten billion euros from the federal budget to build up a capital reserve to stabilize the pension system. However, compared to the trillion cost of the stop line at the supply level, that amount is tiny. Heil wants to introduce his second pension law this year.
The 21 million pensioners are benefiting from his pension package I with the highest adjustment to their old-age pensions for a good 40 years: in the west, pensions will increase by 5.35 percent as of July 1, in the east by 6.12 percent. The reason for the high plus are changes in the basis of calculation. Economist Raffelhüschen speaks of “statistical tricks” that Heil used.
Employer President Dulger called for a realistic and ideology-free debate on pension financing. The state owes it to the people who work hard every day.
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