Analysis by Ulrich Reitz: The traffic lights keep quiet about what is really threatening when it comes to retirement – and gets away with it very well
Subsidies for 15 million e-cars. Subsidies for climate change in industry. Shadow budgets for railways, climate protection and housing construction. Financially, what the traffic light is up to is a bottomless pit. But what does that actually look like in one of the most important socio-political fields, the pension? The finding is surprising.
“Because one thing is certain: the pension.” Everything, but also everything in this pension promise of the traffic light coalition is reminiscent of the socio-political legend of the Union, Norbert Blüm. Hubertus Heil, the old and new labor minister, and Olaf Scholz do not think otherwise. When it comes to pensions, a cultivated “keep it up” applies.
There are reasons that are primarily electoral tactics. The retirees and the generation of those who are just under 60 and who are about to retire are now by far the most important group of voters among the Social Democrats. It should stay that way.
Always informed: coalition negotiations 2021 in the news ticker – the traffic light is on! Now Habeck and Lindner speak live on ZDF
Without the approval of the pensioners, Olaf Scholz could not become Federal Chancellor. In the federal election, the SPD succeeded in breaking the Union’s long-standing dominance among the “best agers”. For this he now thanks with the traffic light contract.
The SPD grew breathtakingly in this age group, namely by a whopping eleven percent. The Union lost seven percent. With 35:34 percentage points, the SPD is now in the lead among pensioners for the first time. It is the same with the next age cohort, the 50 plus generation.
Scholz promises stable pensions – is that realistic?
So it’s no wonder that Scholz and his closest partner, Pension Minister Hubertus Heil, are now keeping their election promise. At most, it is surprising that the Greens and the FDP let them go. And that, although yellow-green, called “lemon parties”, fared best among the young voters.
And nobody can seriously claim that the traffic light decisions are good news for the young. The opposite is the case. The traffic light coalition has bad news for younger people when it comes to pensions.
Stable pensions, stable pension contributions, stable retirement age – that was Scholz’s election promise. And so it is in the new coalition agreement. But is it also realistic? The answer to this is exhilarating for the retirees and terrifying for the young.
Because for the generation that is now retiring or is about to retire, the pensions remain in the Blüm / Heilschen sense: secure. The coalitionists have postponed the pension disaster. It doesn’t start until 2025. So after the next election. What a political scoop for the Scholz government.
DIW: “Significant increase in the pension contribution rate threatens in the mid-20s”
The traffic light coalitioners have put a tight corset on the statutory pension insurance, judges the Institute of German Economy (IW). They guaranteed the pension level, which should not fall below 48 percent, the pension contributions, which should not climb above 20 percent, and the pension at 67.
That has consequences. Marcel Fratzscher, President of the Berlin DIW (German Institute for Economic Research) describes it as follows: “The financing of the social systems, especially the statutory pension, whose costs will explode in the future and require early countermeasures, also remains unsolved.”
Everything you need to know about your retirement
The FOCUS online advisor answers all important questions about pensions on 106 pages. Plus 57 pages of forms.
And Lars Feld, the ordoliberal president of the Freiburg-based Walter Eucken Institute, calls pension the “black spot in the coalition agreement” and demands (in the Handelsblatt) what pension experts have long been demanding: “No ifs or buts, the retirement age must be increased will.”
But Feld also says: The demographic factor (more and more retirees, fewer and fewer contributors) will not hit until 2025. And Johannes Geyer, DIW pension expert, says that a significant increase in the pension contribution rate will not threaten until the mid-1920s. And, as he calculated in FOCUS Online, up to 22.4 percent within the then following 15 years. The consequences for the pension fund are just a matter of math.
The increase in pension contributions by one point corresponds to 16 billion euros. If they increase by four points, as predicted, they are missing 64 billion – per year. At least – the price increase is not yet included.
Long-term restructuring of the pension? In the long term, the others will rule again!
Raising the retirement age, as Lars Feld is currently suggesting, brings a lot – just not quickly, so now. But, as DIW expert Geyer calculates, at most from the 1965 pensioner age group. “That doesn’t help in the short term.”
However, a government mostly works for a short period of time. As a rule, federal governments are not interested in a long-term restructuring of pension systems. Because: in the long term, the others will rule again.
In the medium term, in plain language: In the period up to the next federal election, Scholz will be able to keep his pension promise. “This guarantee does not cost anything at first,” said DIW expert Geyer. It will be exciting “only afterwards”.
And what use is the entry into the capital market-covered pension financing, which the FDP calls “share pension” and which it has pushed through in the coalition negotiations? The expert answer is sobering.
Start-up financing of ten billion euros is planned for the share pension. Unfortunately, the offsetting goes like this: In order to counter-finance the pension increase by one percentage point, i.e. by 16 billion euros, on the capital market, with (at the moment illusory) five percent interest, the use of capital in the amount of: 320 billion euros!
In view of all the other election promises kept in the coalition agreement, this is: “Unrealistic”, judges DIW man Geyer realistically. “That should have started 20 years ago.”
FDP rejects the abolition of spouse splitting – a shame for the pensioners
What can you currently do for your retirement? To keep the labor market fit so that there are enough pension contributors. Immigration helps here (but only that of skilled workers, that of refugees often only ends in the social system).
The increase in the minimum wage to twelve euros also ensures higher pension contributions – albeit at a low level overall. Something else would have helped.
The abolition of spouse splitting. What economists have long been calling for in order to increase the number of people in employment. The splitting of spouses gives the most tax benefits to single-earner marriages, especially those among the high-earning bourgeoisie.
That is why the FDP rejected the abolition of spouse splitting: it would have resulted in a tax increase – a sensitive one – for married couples, the better their earnings, the higher. The pension is now lacking (more) women who pay contributions.
Legalization of cannabis – smoking weed for retirement?
However, one scenario jeopardizes Scholz and Heil’s pension promise: If the labor market collapses, their calculations will no longer work. In the end, only one thing helps: the hope of new sources of income from which an even higher federal subsidy for the pension fund could be financed.
The Ampelkoalition, on the initiative of the youth parties FDP and the Greens, has actually tapped such a new source of income for itself: With the legalization of cannabis, new tax revenues are generated if the Germans only take courageously enough access to the new legal drug. You could do this with a clear conscience. Because:
They smoke weed for their retirement too.
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