Big pension reform: government plans new territory for Germany

Created: 01/14/2023 07:54

By: Tobias Utz

Taxes and contributions have so far financed the pension system in Germany: According to Labor Minister Heil, this is about to change.

Berlin – The SPD wants to surprisingly implement an election campaign idea from the FDP: Before the 2021 federal election, the Liberals campaigned aggressively for the statutory share pension in Germany.

These are investments on the capital market that are intended to support and relieve the pension insurance system.

Such a model has been implemented in Sweden for some time.

The Swedish model contains a basic state pension, which is supplemented by a company pension and private old-age provision.

The Swedish population has to pay 2.5 percent of their gross income into provident funds.

You can choose between the state AP7 fund and other fund solutions.

The fund products invest too much in the global stock markets, as reported by fr.de.

Pension reform in Germany: Heil wants to renew "Generational Contract".

The Federal Ministry of Labor is now pushing for a similar model in Germany: "In order to make long-term provisions, we are creating generational capital in the form of a share reserve for the statutory pension insurance system," said Labor Minister Hubertus Heil of the

.

"This is money well invested in the long term to support the contribution in the 1930s," emphasized the SPD politician.

Heil announced that he intends to present concrete plans for the pension reform in the coming weeks.

The aim is to secure the so-called pension level.

It is currently 48.1 percent and describes the security power of pensions in relation to wages in Germany.

Minister of Labor Hubertus Heil is planning a reform of pensions in Germany.

(symbol photo) © Nikito / Imago Images

The central goal of the pension reform is to “renew the contract between generations through a stable pension level and the creation of a share reserve”.

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So far, the pension system in Germany has been financed primarily through taxes and contributions using the pay-as-you-go system.

The SPD, Greens and FDP had stated in the coalition agreement that they had announced a capital stock of initially ten billion euros to strengthen the pension system.

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Finance Minister Christian Lindner then called for an increase in the amount - and spoke of a "three-digit billion sum", which could have "a noticeable effect on the stabilization of pension contributions and the pension level", according to the FDP federal chairman.

The planned pension reform is apparently the reaction of the Minister of Labour.

(tu/dpa)