As of: January 31, 2024, 7:11 p.m
By: Amy Walker
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The wait for the federal government's new pension package should soon come to an end.
Social Minister Hubertus Heil promises the new law after the budget resolution.
Berlin – The wait is over: As soon as the 2024 budget is finally decided, the traffic light coalition wants to launch the long-awaited pension package II.
Labor and Social Affairs Minister Hubertus Heil (SPD) announced this in the
Rheinische Post
last week .
“The draft law is available and should be implemented quickly after the budget resolution.
We are stabilizing the pension and securing the pension level,” he told the newspaper.
The package, which has been announced for months, is intended to secure pensions in the long term in view of demographic change.
So what exactly does this mean for citizens?
And: Will the traffic light plans be enough to get the challenges with statutory pensions under control?
Traffic light plans: secure pension levels at 48 percent
The plan is to secure an existing holding line for the pension level of 48 percent in relation to wages in the long term with the pension package announced by the traffic light.
Put simply, this means that pensioners should, on average, later receive at least 48 percent of their previously received wages as a pension.
In reality it usually looks different - but the pension level is an important indicator for quantifying the average pension.
This so-called holding line currently applies to the statutory pension coverage level until 2025 - the new pension package is intended to create a legal basis beyond this.
The pension package also includes share pension plans (generational capital), which are intended to relieve the burden on pension insurance in the long term.
A capital stock is to be gradually built up from public funds, the income from which will be used to stabilize pension contributions and the pension level.
Labor Minister Hubertus Heil (SPD) has announced pension package II for 2024.
© Reuhl/imago-images
The stock pension is intended in particular to ensure that the contributions that all employees pay into pension insurance do not have to increase too quickly.
Currently, employees and employers each pay half of 18.6 percent of gross wages into the pension fund.
However, due to demographic change, more and more pensioners are faced with fewer and fewer contributors.
So that the many pensioners can still receive a pension (or one that is enough to live on), the financing of the pension fund must be put on a different footing.
Essentially there are the following options:
Increase contributions
: According to the pension insurance, the contribution rate would have to rise to 20 percent by 2030 at the latest if the pension level is to remain at 48 percent
Increase federal subsidy
: In 2024, the federal government plans to spend 126 billion euros on pension insurance.
That corresponds to a share of 28 percent of the total budget - so a big chunk of money already goes into the pension fund every year
Create other financing options
: The traffic light coalition therefore wants to introduce stock pensions in order to fill the pension fund;
However, there is also often discussion about increasing the number of contributors, for example if self-employed people and civil servants would also pay into the statutory pension fund.
However, this would mean a lengthy pension reform – and would be potentially unpopular.
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With Pension Package II, the federal government wants to secure the level of pensions in the long term (pension level of 48 percent) and at the same time delay an increase in contribution rates as much as possible.
This won't go well because one thing will inevitably lead to the other.
Experts also criticize this.
The so-called economists in particular pointed this out in their last report in the summer of 2023: “Specifying the security level as the federal government is currently planning is not a sustainable solution, but rather reinforces the foreseeable increase in contribution rates.
This exacerbates the distribution conflict between pension recipients and contributors.”
According to pension expert Martin Werding, there must be “a combination of various individual measures” in order to financially secure the pension insurance.
He and his colleagues in the Federal Government's Council of Experts are calling for the retirement age to be adjusted to life expectancy and the introduction of mandatory private pension provision.
Through these two measures, “the level of security can be significantly increased in the long term and the risk of poverty in old age can be reduced,” write the economists.
Furthermore, economists have criticized early retirement - “pension at 63”.
This means that people who have paid into the pension fund for at least 45 years can retire two years before their regular retirement date - without a reduction in their statutory pension.
Economists consider this to be the wrong signal, which will only place an unnecessary additional burden on the pension fund.
But Minister Heil doesn't want to hear about this criticism.
“Anyone who has worked for 45 years has the right to retire earlier without deductions.
“I won’t be able to retire at 70, as many conservatives want,” said Heil.
The Union had repeatedly called for the “pension at 63” to be abolished, also in view of the shortage of skilled workers, and to be replaced by a better disability pension.
With material from dpa