German coalition parties fire back at proposals to change pensions

German governing coalition parties have fired back at the idea of increasing the country’s retirement age, and at the same time cutting pension pay-outs for higher contributions, proposed by the chair of the Council of Economic Experts (Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung) to place Germany’s pension system on a stronger footing.

“We have no plans to link the retirement age to life expectancy, and that wouldn’t make sense either,” said Martin Rosemann, member of the Social Democratic Party and social policy speaker in parliament, in response to an interview with the Süddeutsche Zeitung newspaper of Monika Schnitzer, the chair of the Council of Economic Experts.

In the interview, Schnitzer proposed that employees should work eight months longer for every year of additional life expectancy, meaning bringing the retirement age to 69 in 2061. The retirement age in Germany is gradually increasing to 67.

The chair of the group of experts also called to raise contribution rates now so that the ‘baby boomer’ generation, who will soon be retiring, can contribute to finance the retirement phase, according to the report in the Süddeutsche Zeitung.

Moreover, Schnitzer has proposed to cut pension payouts for higher contributions in the future. Anyone who has paid twice as much for pensions would no longer automatically get twice as much, Schnitzer said.

The chair had also criticised the “Rente mit 63” rule allowing people with 45 years of contributions to retire early.

Chancellor Olaf Scholz has late last year unlashed a debate on longer working life.

The social policy speaker of the parliamentary group of the liberal party FDP, Pascal Kober, said on T-Online news website that “a cut in pensions is out of the question. People have paid for it their entire working lives.”

Kober added that the financial situation of the pension system in Germany can improve through the immigration of skilled workers and the statutory equity pension (Aktienrente) fund.

The government wants to deploy €10bn to an equity fund within the first pillar pension system to invest globally in capital markets.

Finance minister Christian Lindner, who chairs the FDP party championing the Aktienrente idea, has admitted recently that the equity fund would need a “three-digit billion” sum in the medium to longer term to impact and stabilise the level of pensions and contributions through returns on the equity market.

The deputy head of the Green Party group in parliament Andreas Audretsch said that with the traffic light coalition of SPD, Greens, and FDP “there will be neither pension cuts nor an increase in the statutory retirement age”, adding that the governing coalition will keep the contribution rate for pensions “stable below 20%”.

Criticism of Schnitzer’s demands also came from the Union, the alliance between the CDU and CSU parties, wit the speaker on socio-political matters Stephan Stracke saying that cutting high pensions would be “highly unfair”.

The pension policy speaker of the The Left (Die Linke) party, Matthias W. Birkwald, said instead that the idea of “flattening out high pensions” would be reasonable.

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