Tuesday, April 7, 2020

Pension commission wants to allow higher contribution rates

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DAccording to the Federal Government’s Pension Commission, the contribution rate of the statutory pension insurance should be within a new range of up to 24 percent of gross wages after 2025. “The mandatory stop line for the contribution rate (as the upper stop line) should be in the corridor between 20 and 24 percent,” says the F.A.Z. present final report, which the Commission wants to transmit to Federal Minister of Social Affairs Hubertus Heil (SPD) this Friday.

A corresponding range of 44 to 49 percent should apply to the indicator of the pension level – based on the average wage. In future, the federal government should always specify which specific limits are valid in seven-year increments, for the first time for the period from 2026 to 2032. “The respective stop lines should be set at least one year before the new stop lines come into force” , says the Commission report.

The “Reliable Generation Contract” commission set up almost two years ago, headed by former members of the Bundestag Gabriele Lösekrug-Möller (SPD) and Karl Schiewerling (CDU), consists of a total of ten members. In addition to other social politicians from the Union and the SPD, it also includes representatives of the social partners and academics. Contrary to what was originally planned, they will not hand over their report personally to Heil, but digitally and as part of a conference call with the minister.

Slight shifts in favor of pensioners

Currently, a holding line set by the grand coalition in 2018 of 20 percent for the contribution rate and 48 percent for the pension level applies for the years until 2025. If the defined contribution rate is insufficient, for example due to falling employment or increasing numbers of pensioners, to finance the expenditure for retirees associated with the specified pension level, the government will have to inject additional money from the federal budget – in addition to the existing grants of currently over 100 billion euros in Year. Previously, the former red-green federal government had previously set stop lines of 22 percent for the contribution rate and 43 percent for the pension level.



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Compared to the previous stipulations, the newly proposed corridors therefore bring slight shifts in favor of pensioners. However, this is not enough for the German Trade Union Confederation (DGB). In a special vote in the report, its representative on the commission, Annelie Buntenbach, demands a withdrawal to 50 percent. This would mean that pensions would have to rise faster than wages for a while, even if the number of pensioners rose. Most recently, the indicator of the pension level was a good 48 percent.

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