As of: March 14, 2024, 11:40 a.m
By: Bona Hyun
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Germany is not well prepared for an aging population.
At least not from a financial perspective - shows a report from Lindner's ministry.
Berlin - The population is aging and pension contributions are rising: According to a report from Christian Lindner (FDP), today around one in five people in Germany is older than 66 years, and in 2070 it could be almost one in three.
This poses problems for the state.
According to the current sustainability report from the Ministry of Finance, Germany is financially less prepared for the aging of society.
Too little investment for the future – but there could soon be more and more pensioners
The problem: Because fewer citizens are working, the state collects less taxes.
The same applies to social security contributions.
At the same time, more citizens are receiving benefits, for example from pension and nursing care insurance.
According to the report, demographic-dependent expenditure, for example for pensions, health, care and family, could increase from the current 27.3 percent of economic output to 30.8 percent in the best scenario, according to the report.
Under unfavorable conditions they could even climb to 36.1 percent.
State finances are apparently not very sustainable.
What does this mean for retirees?
© Sven Simon/imago/ Michael Kappeler/dpa (montage)
The sustainability report is considered an early warning system for state finances.
It shows the consequences that aging society has on government finances - other burdens such as climate change and possible future crises are not taken into account.
The report prepared by the Ministry of Finance is based on reports from external scientists and appears once per legislative period.
The model calculations are purely hypothetical and assume that politics will not change.
What does sustainability mean in economics?
The sustainability of public finances is understood as the state's ability to maintain public finances in the long term at a level that enables the state to meet its financial obligations.
Report on public finances: debt ratio could rise – consequences for pensioners
Under favorable assumptions, the “viability gap” determined for 2070 is 1.6 percent of economic output.
If one assumes a pessimistic scenario, this would be 4.7 percent.
Measured against the current gross domestic product, the state would have to spend between 66 and a good 194 billion euros less or earn more.
The experts assume that Germany is aiming for the Maastricht debt ratio of 60 percent of GDP.
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Another problem is the rising debt ratio if the government does not comply with the debt brake.
The debt ratio could then rise to 345 percent of GDP by 2070 in the worst scenario and to 140 percent in the favorable scenario.
“Compliance with the debt rule would contribute to the long-term sustainability of public finances by reducing the debt ratio,” the report says.
Too little investment in the future?
Appeal to Finance Minister Lindner
The Ministry of Finance sees the projection as confirmation: sustainable development of public finances is only possible with structural changes.
Putting the financing of the statutory pension on a third pillar, the capital market with the help of stock pensions, as planned by the traffic light coalition, is only a first step.
Finance Minister Lindner (FDP) recently advocated thinking about a longer working life.
In addition, the demographic problem should be alleviated through the immigration of skilled workers.
Lindner is also focusing on better economic growth – the keyword is the “economic turnaround” program.
It is intended to improve the location factors of the German economy.
(bohy/dpa)