As of: March 13, 2024, 1:14 p.m
By: Fabian Hartmann
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Federal Labor Minister Heil (SPD) recently suggested including civil servants in the pension fund.
What would be the consequences for the state budget?
Frankfurt – The pension system is facing difficult times: more and more baby boomers will soon be retiring.
On the other hand, there are fewer and fewer contributors.
With its recently presented new pension package II, the traffic light coalition wants to make pension provision stable and maintain the pension level of 48 percent in the future.
To finance it, the pension package is to be put on a new footing: To achieve this, the federal government plans to invest billions in the capital market.
The federal government also plans to stick to the retirement age, which has already led some camps to criticize that Pension Package II would shift costs onto younger generations.
Labor Minister Hubertus Heil (SPD) recently introduced another idea in the debate about pension reforms.
He explained that he could imagine an expansion of statutory pension insurance to members of other groups, including civil servants.
Criticism of Heil's plans came from, among others, the police union (GdP).
“The federal government is very well advised to strengthen pensions in Germany and at the same time preserve the pensions of us law enforcement officers,” said the GdP federal chairman Jochen Kopelke at the
editorial network Germany
(RND).
But what exactly would change if civil servants also paid into the pension fund in the future?
No social security contributions, but pension – what retired civil servants currently receive
In that they have not yet contributed to the pension fund, civil servants are pretty much alone as a professional group: Employees usually pay 18.6 percent of their gross wages per month to the pension fund as a pension insurance contribution - financed on both sides by the employee and the employer .
Self-employed people, on the other hand, are not compulsorily insured, but can make voluntary contributions and receive corresponding benefits in old age.
Since civil servants do not pay into pension insurance, they do not receive a pension when they get old.
Instead, they are obliged to the state for life and receive a so-called pension when they retire.
Depending on the number of years of service, the amount is between 35 and 71.75 percent of the last basic salary.
In order to receive the maximum rate, civil servants would have to have worked as such for at least 40 years.
Civil servants not only do not pay pension fund contributions, but also do not pay any social security contributions overall - at least so far.
Therefore, they enjoy a significantly higher net salary.
With an annual salary of 50,000 euros, pension contributions alone amount to 4,650 euros for a normal employee.
What income does the current special status of civil servants have in contrast to the pension insurance?
Of course, the pension insurance also loses income.
However, on the other hand, she does not have to cover any expenses for retired civil servants.
But how much potential revenue is lost to the state budget because civil servants in Germany do not pay social security contributions?
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The most recent figures published by the Federal Statistical Office are from 2018. At that time, the federal, state, local and social security personnel expenditures were estimated at 292.451 billion euros.
However, the state not only pays civil servants, but also ordinary employees.
The civil servant quota is
at around 34 percent.
If, for the purpose of easier calculation, one assumes that civil servants also receive around 34 percent of total personnel expenses, this would amount to a total of 98.2 billion euros per year.
If an 18.6 percent pension insurance contribution were then due, according to
Focus
calculations , the statutory pension insurance would receive an additional 18.3 billion euros per year.
This 18.3 billion euros in additional income would then have to be distributed among the over 22 percent of people of retirement age.
But that's not all, because according to Federal Labor Minister Heil's idea, the pensions of civil servants would from now on also have to be paid from the income of the pension insurance.
What different types of pension insurance switching would mean in concrete terms
In the event of an immediate change, the pension insurance would also have to cover the current pensions of civil servants.
These lie
at an average of 3200 euros, twice as high as the average pension payment.
According to Focus,
with currently around 1.4 million pension recipients, this would mean
expenditure of 53.5 billion euros per year - which would be many times higher than the possible additional income.
However, if the pension system were to be changed slowly, new civil servants would ultimately receive significantly lower pension insurance benefits.
Since civil servants are on average better qualified than employees and receive higher salaries, their pension benefits would also be above average.
Assuming an average pension of 1,600 euros per month, the pension insurance expenses would be
according to
Focus
at around 30 billion euros per year - and again significantly higher than could be achieved through income.
Federal Minister of Labor Hubertus Heil (SPD) and Federal Minister of Finance Christian Lindner (FDP) © IMAGO/Jürgen Heinrich
A further financial burden for the state could arise from the longer life expectancy of civil servants than normal employees.
On average, they live around four years longer.
The Federal Statistical Office estimated the resulting additional costs at around 11 percent annually - i.e. between 3.3 and 5.9 billion euros per year.
Depending on the type of pension reform, the additional expenses for pension insurance would be an estimated 33.3 to 59.4 billion euros per year - with additional income of just 18.3 billion euros.
(fh)