Germany’s political parties are battling over the future of the pay-as-you-go pension system, promising a stable level of pensions, and to expand coverage to the self-employed, while abandoning the idea of the public equity fund in the last stretch of their campaigns before Sunday’s elections.
Chancellor Olaf Scholz spoke in favour of a “guaranteed” statutory pension in the future during a town hall this week, if enough people pay contributions. He linked the level of first pillar pensions to a strong labour market and level of wages.
The chancellor lashed out at experts that “are not right” when saying that the level of pensions will decrease, while the level of contributions will increase.
“We can afford in Germany a stable level of pensions, because we have already shown that it works. We pay lower contributions today than at the turn of the millennium because in Germany now work six million more people,” he said.
He has also promised the German public that the retirement age won’t increase, a guaranteed level of pensions, meaning that pensions must increase in line with wages, and early retirement after 45 years of contributions without pension cuts.
Scholz’s promises come as the pay-as-you-go system is on a path to record a €7bn deficit next year, while public subsidies for the first pillar pension system will increase to €140bn by 2035, according to a reply of the government to a parliamentary inquiry of the Union, the alliance of Christian Democratic Union (CDU) and Christian Social Union (CSU).
Robert Habeck, chancellor candidate for the Green Party, admitted during the town hall that the pension system is under pressure.
“I can promise you [that we will] continue to apply the rules that we have in place,” he said referring to a stable level of pensions.
Both Habeck and Scholz announced at an event organised by the German Trade Union Confederation (DGB) that, in the case of an electoral victory of their parties, the self-employed will be covered by statutory pensions, also to improve the first pillar’s liquidity situation.
The liberal party (FDP) has rejected a mandatory membership for the self-employed.
“There is no need for a red-green (SPD-Greens) first pillar compulsory pension, which, by the way, will also create new [pension] claims in the coming decades. Instead, we have to get to the root of this, with a statutory equity pension like in Sweden,” said FDP deputy chair Johannes Vogel.
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