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Hubertus Heil wants to stabilize pensions with more employees

2022-01-13T08:58:24.081Z

Pensions are expected to rise sharply again this year. However, Minister of Labor Heil wants to get along in the long term as far as possible without further tax subsidies or increasing contributions.



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Looking into an uncertain future: the statutory pension is facing huge challenges with the baby boomers

Photo: Neundorf / Kirchner-Media / picture alliance

The current form of the pay-as-you-go pension system is reaching its limits.

Because society is aging, there are too many recipients in the long run compared to too few contributors.

Nevertheless, Federal Labor Minister Hubertus Heil sees him as the key to keeping old-age provision stable in the coming decades without escalating costs.

"The decisive battle to stabilize pensions is taking place on the labor market," said the SPD politician to the dpa news agency. "The stabilization of the statutory pension from 2025, that is, at the time when the baby boomers are more likely to retire, will not be achieved through contributions and tax money alone." Above all, it is necessary to have as many people of working age as possible in good to have paid work.

In fact, the pension fund has already benefited from increasing participation in the labor force in recent years.

According to data from the pension insurance, the proportion of employees between 60 and 64 subject to compulsory insurance rose from 10 to 42 percent between 2000 and 2019.

The number of insurance years rose within 20 years from an average of 27.7 to 36.3 years - also due to the higher participation of women.

The number of foreigners in the German pension insurance rose sharply from 2.8 million in 2000 to 6.8 million in 2019. According to the pension insurance, all of this has increased income.

Comprehensive reform employer

Nevertheless, Germany's employers have repeatedly warned against increasing contributions or the need for further billions in taxes for the pension fund. And: The pay-as-you-go system is already being reformed - the retirement age will gradually increase from 65 to 67 years from 2012 to 2031. Nevertheless, the share that the state has to contribute from tax revenues to pension insurance has continued to grow. More than 100 billion euros are already flowing into the pension fund from the federal government.

The system will face a particular challenge in the future due to the baby boomers. Speak through the generation of baby boomers who are between 55 and 60 today. She is often still in the middle of her working life, but when she retires, the structure is postponed. In 2035, the strongest age groups will be around 70 years old - and will then usually no longer be among the contributors to the pension fund, but rather among the recipients.

Employer President Rainer Dulger had therefore accused politicians of “failing to reform” and “flying completely blind”.

The top business officials are particularly dissatisfied with the pension plans from the coalition agreement.

Your calculation is: If the pension level is secured at 48 percent, as announced, and an increase in the age for retirement is to be dispensed with, higher contributions or more tax subsidies would inevitably result.

Heil wants to avoid pension cuts

Heil now defended the pension plans as a "double strategy".

"We are financially stabilizing old-age pensions, also by building up the capital stock," he said.

The traffic light coalition wants to start building capital in the pension fund in the new year with initially ten billion euros.

"And at the same time we will do our homework on the job market."

Between 2025 and 2040, too, it should be fair between the generations and the pension system should remain stable.

"We can do that - without horror scenarios and without ruining the statutory pension, as some ideologues have been trying for years."

Before the next pension increase on July 1st, Heil wants to reactivate the effect of the catch-up factor. With this previously announced change in the calculation, the pension increase should be slightly smaller than originally forecast - to the displeasure of the unions. Heil now promised that, according to estimates, there would still be "a substantial pension increase" this year. He described the catching-up factor as compensation for "the fact that there was no pension cut in 2021 despite the Corona slump". In fact, an existing pension guarantee had resulted in a zero round last year.

The pension development continues to follow the principle of wage development, said Heil.

It is important to him that there are no pension cuts in either good or bad times.

"As things stand, this summer should be an increase of over four percent." At the end of November, Heil had named 4.4 percent.

The President of the Pension Insurance, Gundula Roßbach, had announced that the final amount of the adjustment for July 1 would not be known until spring.

apr / dpa

Source: spiegel

All business articles on 2022-01-13

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