The German employers association – BDA – has slammed the government’s latest pension measures to keep people at work for longer, saying that such move could lead to a potential €1.7bn annual burden for contributors.
According to BDA’s chief executive officer Steffen Kampeter, the country’s political traffic-light coalition of Social Democrats (SPD), the liberal party (FDP) and Greens curb the positive effect coming from the decision to ease conditions to employ older people with new additional costs worth billions of euros for the first pillar pension system, and thus for contributors.
“Higher burdens on employers and employees act as a brake on growth”, he added referring to pension policy measures included in the so-called Growth Initiative (Wachstumsinitiative) approved by the government last week.
The German government has approved pension policy measures as part of the Growth Initiative to fight its current shortage of skilled workers and boost the economy, with incentives for people to work after reaching retirement age.
According to the measures, if workers postpone retirement beyond retirement age and continue to work for at least one year, subject to compulsory insurance, they can claim a one-off payment – the pension deferral premium – instead of monthly supplements.
Employers can pay first pillar contributions for employees exempted from contributions as wages, to create incentives to continue to work not only in minor jobs but also offering a low monthly salary or giving the possibility to work only for a limited amount of time annually.
Moreover, survivors are pushed to work longer by excluding earned income and short-term replacement income up to an amount of currently €538 per month (base amount) when calculating income for pensions.
The impact of these measures is “uncertain and, above all, expensive”, the BDA said.
The German Trade Union Confederation (Deutscher Gewerkschaftsbund) said the pension deferral bonus is “good for those who earn enough and are healthy enough to postpone the start of retirement”.
Those workers are “rewarded with a contribution-free additional payment”, having a “massive advantage over everyone else”, it added in a statement.
This will cost the first pillar schemes “billions of euros”, and significantly reduceing the income of health and nursing care insurance policies, it added.
Sozialverband VdK, an advocacy group fighting for social justice, believes the measures proposed by the government “split the older generation” between those who are healthy and can still work after reaching retirement age, and those “who can no longer work due to illness, are burnt out or caring for their relatives”.
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