As of: March 6, 2024, 2:32 p.m
By: Amy Walker
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The traffic light coalition's pension package provides for a more significant increase in contributions to pension funds than previously expected.
The 20 percent mark should be reached in just four years.
Berlin - With its law on pension package II, the traffic light government is planning a significant increase in pension contributions from as early as 2028. This emerges from a draft of the law, which several media outlets, including Spiegel
,
are unanimously reporting on.
Accordingly, the contribution to the pension fund should jump to 20 percent from 2028 and then to 22.3 percent by 2035.
Secure pension level to 48 percent
The traffic light coalition wants to secure the financing of a permanent pension level of 48 percent.
The pension level indicates what percentage of an average salary a retiree receives on average as a pension.
The average gross income in Germany is 49,260 euros, 48 percent of which is 23,644.80 euros.
This results in a gross monthly pension of 1,970.40 euros.
However, the actual average pension is lower: in 2023, pensioners received an average of 1,543 euros per month.
This shows that the pension level is a purely mathematical figure and does not necessarily have a one-to-one effect on the actual pension amount.
According to the draft law, the pension level would have to be reduced again for the first time from 2028 if a new way to finance it was not found.
To this end, it was decided to increase contributions and at the same time introduce stock pensions in order to replenish the pension fund.
Table: This is how pension contributions affect the wage ticket
There have been increases in contributions to over 20 percent in the past.
Between 1997 and 1998 the contribution rate was 20.3 percent and was reduced to 19.5 in 1999.
Since 2011, the contribution rates have been reduced three times.
But according to the new draft, contributions will rise to over 22 percent for the first time, and to 22.3 percent by 2035, according to an assessment by the federal government.
We have calculated here how this can affect an individual's net wage:
Gross wages |
Pension contribution at 18.6% |
... at 20 % |
... at 22% |
... at 22.3% |
|---|---|---|---|---|
2000 Euro |
186.00 euros/month |
200 euros/month |
220 euros/month |
223 euros/month |
3000 euros |
279.00 euros/month |
300 euros/month |
330 euros/month |
334.50 euros/month |
3500 euros |
325.50 euros/month |
350 euros/month |
385 euros/month |
390.25 euros/month |
4000 euros |
372.00 euros/month |
400 euros/month |
440 euros/month |
446 euros/month |
4500 euros |
418.50 euros/month |
450 euros/month |
495 euros/month |
501.75 euros/month |
4800 euros |
446.40 euros/month |
480 euros/month |
528 euros/month |
535.20 euros/month |
5000 Euro |
465.00 euros/month |
500 euros/month |
550 euros/month |
557.50 euros/month |
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The additional burden is sometimes considerable - a person with a gross wage of 4,000 euros per month already has to pay 842 euros in social security contributions.
With a pension contribution rate of 22 percent, that jumps to 910 euros.
Economist: Pension package is not enough
The economist Martin Werding believes the federal government's current pension plans are inadequate.
Werding said on Tuesday in the ZDF “Morgenmagazin” that he hopes that something will happen in the direction of private pension provision during the legislative period.
“You can and must do that,” emphasized Werding, referring to the original FDP plans for a stock pension.
Federal Labor Minister Hubertus Heil (SPD) and Federal Finance Minister Christian Lindner (FDP) want to present their plans for a new billion-dollar capital stock for pension insurance on the stock market this morning.
But this has little to do with the FDP proposal.
Contribution money is now not earmarked for the capital stock.
During the election campaign, the FDP advocated that two percent of income be put into funded pension provision.
Christian Lindner (l) and Hubertus Heil (r) sit in a plenary hall and talk to each other.
© picture alliance/dpa |
Kay Nietfeld
Werding generally approved the current plans.
“This is basically the way to make long-term provisions with a changed age structure,” said the member of the Advisory Council for assessing economic development.
But this is not enough.
The expert also pointed out that the federal government only expects up to ten billion euros per year to flow from the capital stock into the pension fund from earnings on the stock market.
In a system with expenses of 400 billion euros, this is a very small contribution and only covers pensions for about a week.
SPD General Secretary Kevin Kühnert defended the new pension plan.
He said in the RTL/ntv “Early Start” that it was about predictability in the statutory pension.
Pensions will continue to rise in line with wage developments and future pension recipients will have their standard of living secured.
This would not have been secured without the package.
It is also ensured that there is no speculation with the contributions of the insured.
“The risk does not lie with the insured,” Kühnert made clear.
With material from AFP