The pension reform lies in the poison cupboard of all political initiatives. Anyone who digs them out faces political death, being voted out. Hardly anything is more urgent than the all-round renovation of the statutory pension insurance.
In 2023, for the first time in Germany, more people will retire than will come of age. The Republic of the Old is a reality, in some districts there will be more people with a care level than residents under the age of 30.
The intergenerational contract, which was never formally signed but forms the intellectual basis of a prosperous society, has been terminated by both sides.
And the notary, the state, is watching.
While today there are statistically just under two employees for every pensioner, in 10 years it will be fewer than 1.5 employees.
At the beginning of the 1960s, there were six active insured persons for every pensioner.
The system implodes. And mathematics cannot be politically tricked.
If fewer and fewer young people are financing more and more old people, the promise – stable contributions, stable pensions – cannot be kept unless Germany either puts hundreds of thousands of immigrants directly into jobs subject to social security contributions (which it doesn’t look like) or cuts pensions or increases contributions.
Politicians who now propose a longer working life as a recipe will quickly feel the resistance of a media and demographic majority.
Stay away from retirement!
SPD and Union have therefore mostly avoided the issue and preferred to invent new pension benefits.
Your electoral clientele is congruent with that of your members: Ü60. That inhibits political courage.
But now the problem can no longer be ignored.
In an interview with The Pioneer, Prof. Monika Schnitzer, head of the economics department, warns of the collapse: “Without reform, the pension system will not be sustainable. Baby boomers entering retirement will put a heavy strain on the system.”
Here are six inconvenient truths about retirement, along with a few reform ideas:
The pension fund officially expects a surplus of two billion euros in 2022.
But without the tax subsidy of over 100 billion euros, the system would implode. The pension insurance depends on the needle of the Treasury, every year there is a bigger injection.
Politicians increase dependencies with new pension benefits. Mother’s pension, basic pension, pension at 63.
There shouldn’t be any state emergency aid from the budget, the state would have to set aside tomorrow’s pension payments as provisions today.
The Freiburg economist and pensions expert Bernd Raffelhüschen has calculated that around 3,000 billion euros would be needed to stabilize the pension fund by 2040 if everything were to remain as it is.
Alternative: Future generations would have to shoulder a contribution rate of 29 percent in order to keep the pension level at 48 percent.
“Young people won’t want to pay for that anymore,” says Raffelhüschen.
The economic miracle in the young Federal Republic brought prosperity for the masses, but a big problem for the pension fund.
In the 1950s and 1960s, the economy was booming, confidence was high in the country, and birth control pills were not yet available.
Consequence: More babies than ever.
In 1964 there were 1.36 million births in Germany – a record value. Today it is almost 800,000 per year.
The group of baby boomers is now pushing into retirement.
According to the Federal Statistical Office, 13 million people will retire in the next 15 years, a third of all people available on the labor market.
A bloodletting for the national economy and a fiasco for the remaining contributors. The children of the baby boomers have to pay, but they are significantly fewer in number.
Economic wise Monika Schnitzer therefore proposes that the increase in pensions for this special group should not be linked 1:1 to wage developments, as has been the case up to now.
It would be a pension cut for baby boomers.
Another demand provides for the reintroduction of the sustainability factor, which SPD Labor Minister Hubertus Heil suspended in 2018.
Anyone who does not want to cut pensions or increase contributions as life expectancy increases will have to pay their pension later. In other words: let people work longer.
Economists believe that a higher retirement age is inevitable – but the SPD, Greens and trade unions are fighting back.
The roofer, who works physically hard, is given as a cautionary example, although the disability pension would financially cushion earlier retirement for him today.
Retirement at 67 has been decided but has not yet been implemented. The actual retirement age is 64.1 years (men) and 64.2 years (women).
The FOCUS Online guide answers all important questions about pensions on 135 pages. Plus 65 pages of forms.
This is far from enough to absorb the demographic burden.
Economics Monika Schnitzer is now proposing to link pensions to life expectancy. For every year more life expectancy, working hours should be increased by 8 months.
“That would bring us to a retirement age of 69 in 40 years. There is still a long way to go, enough time for the young generation to prepare for it.”
Basic pension, retirement at 63. The message that has been sent out in politics over the past few years has always been: those who are old should rest.
This hardly corresponds to the reality of life. According to surveys, more than half of all employees do not want to retire at the legally stipulated time, and the increasing number of working retirees shows what the old people think of the early retirement ideology.
The fact that the grand coalition is first sending people into early retirement, and now the traffic light is relaxing the rules on additional income for early retirees, shows the contradictions in German pension policy.
In Sweden, the retirement age is flexible and people still work longer voluntarily. Anyone who retires at the age of 61 has to cope with heavy deductions, while those who only want to retire at the age of 68 will receive a significantly higher payment.
Result: Sweden is in the top group in Europe when it comes to the actual retirement age.
With ten billion euros, the traffic light wants to create a state-subsidized share pension for the first time this year, which is intended to relieve the pay-as-you-go system.
It is a long-standing wish of the FDP.
A good idea, but it’s late and the volume is too low.
“It doesn’t take ten billion euros, but 3,000 billion euros in provisions in the system,” criticizes pension expert Raffelhüschen.
The share pension reminds him a bit of an effective cancer drug that you don’t prescribe to the sick mother, but to the daughter.
Raffelhüschen says: “Seriously, capital cover through shares is a good signal, but it only takes effect after 25 to 30 years.”
Ever since the Prussian King Friedrich Wilhelm I, the civil servant has been a species that is particularly worthy of protection in this country.
Their special “loyalty” to the state and their “sovereignty” powers enshrined in the Basic Law make civil servants noble employees with an eagle on their letterhead.
The privileges: extensive protection against dismissal, state-subsidized health insurance and a good pension in old age.
But the system is antiquated. It underscores injustice when only 35 percent of all public sector employees receive this status. In some offices, the official sits at the same desk opposite the clerk.
The federal, state and local governments pay 80 billion euros a year for the pensions of their civil servants, and the pension entitlements of all civil servants add up to 3 trillion euros, according to calculations by the Freiburg Institute for Finance.
This will have to be paid for by future taxpayers, because the state never invested the social security contributions saved as a reserve for the civil servants, but spent them immediately.
The two-tier society in retirement can no longer be maintained.
Leaving aside the qualifications and protection status of the civil servants, the result is that anyone who earns 3,500 euros gross per month as an employee and pays into the pension for 45 years will receive a pension of 1,500 euros per month in retirement, a civil servant with the same monthly earnings comes after 45 years to a pension of 2500 euros.
Politicians do not dare to take advantage of the privileges because they themselves benefit from them.
The traffic light has increased the jobs in their ministries by 60 percent to 30,000. Every tenth member of the Bundestag from the SPD, Greens and FDP also holds a government office and thus acquired new pension entitlements.
There is no good reason why politicians should not provide for their old age themselves.
The only solution is the radical cure. Back to the Prussian origins: Only the judiciary, the Federal Armed Forces, security authorities and financial management are sovereign tasks. Everything else may and can also be done by (well-paid) employees.
Conclusion: Making pensions secure is a political task of the century. It takes courage to circumcise yourself too. True civil servants could become happy with it. Or to say it with Goethe: “He who does not command himself always remains a servant.”
Michael Bröcker is editor-in-chief of Media Pioneer. The free morning briefing can be found here: www.gaborsteingart.com