E.In an expert report for the Federal Ministry of Economics, the debate about ways to a financially viable statutory pension has opened – but the election programs of the parties have so far hardly matched this goal. This is especially true for the SPD, the Greens and the Left Party: They do offer retirees the prospect of higher pensions than they could expect according to the current legal situation. However, they do not make any statements about limiting financial burdens for contributors and taxpayers. The Greens’ draft program states, for example: “In order to limit the burdens on the insured and employers, the tax subsidies should be increased if necessary.”
The new report, which the Scientific Advisory Board at the Ministry of Economic Affairs has now published (the FAZ reported in advance on Monday), warns urgently against this path. Because the burden of increasing pension expenditures for the younger generations will not be absorbed solely by shifting parts of it to the taxpayers. That would “blow up the federal budget and would not be financially viable even with massive tax increases”. The lead author is Axel Börsch-Supan from the Munich Max Planck Institute for Social Law and Social Policy.
If one wanted to keep the so-called pension level permanently at 48 percent, as the SPD and the Greens are planning, then around half of the entire federal budget would have to flow into the pension fund in the 2040s in order to keep the contribution rate below 22 percent of gross wages. The parameter pension level sets pension entitlements in relation to the current average wage; before the corona crisis it was 48 percent. Specifically, setting it as the lower limit means that the annual pension increases for senior citizens must no longer be less than the average increase in wages. With an inflation adjustment, the purchasing power of the pension would be stable, but the parameter of the pension level would still decrease.
Can the pension be financed?
For a long time, a guideline value of at least 43 percent until 2030 had applied. Then the CDU / CSU and SPD introduced a new “holding line” of 48 percent in 2018, which they initially stipulated until 2025. Until then, a gradual decrease in the parameter was even politically wanted in order to relieve the younger generation; this is precisely why the annual pension increases should be somewhat lower than the wage increase in the event of a sharp increase in the number of pensioners. Demands to fix the pension level at 48 percent aim to abolish this compensation.
The SPD goes a little further in its program than the Greens, it wants “at least” 48 percent. The Left Party is even promising 53 percent. To do this, pensions would have to rise even faster than the wages of the younger generation. The left pension politician Matthias Birkwald reacted particularly sharply to the new expertise on Monday. Börsch-Supan has “been trumpeting the world without facts for years” and is “outright nonsense”.
The FDP was somewhat different: Their pension politician Johannes Vogel rated the report as a “devastating judgment on the pension policy of the Union and the SPD – and of the Bundestag election programs of the SPD and the Greens”. The black-red coalition “actively slept through demographic change” and exacerbated the problems with their pension packages. There is not yet an election program for the Union. CSU boss Markus Söder is already planning to further expand the mother’s pension. In its program, the FDP does not make any promises about the level of pensions. She is promoting a “statutory share pension” based on the Swedish model; this is intended to improve the financing of the statutory pension through partial capital coverage.
In addition to linking the retirement age to general life expectancy, the advisory board’s report also puts unconventional solutions up for debate. One provides for “holding lines” for the pension level only to be used for the initial calculation of the pension amount when retiring – the subsequent annual increases would then be based on the inflation rate. That applies in France, for example, argues the advisory board.
He also outlines a model in which different annual rates of increase apply to pension entitlements, depending on the amount. Insured persons with higher wages would then, calculated per euro of contribution payment, receive less pension than insured persons with lower wages. Left-wing politician Birkwald called this approach, which the advisory board classifies as a contribution to the debate without the character of a recommendation, a “good idea”.