The German government coalition partners social democrats (SPD), the Greens and the liberal party (FDP), have shown disagreements as Parliament (Bundestag) starts the debate today on reforming the first pillar pension system, known as Rentenpaket II.
“The pension package is not yet ready for approval in parliament,” FDP deputy chair Johannes Vogel told Bild newspaper.
He added that the reform leads to increasing contributions for the middle class which is a driving force to stimulate a stagnant economy.
“Sweden, for example, shows how, if you are brave enough to change the system, you can use an equity pension [model] to ensure that the pension level increases and not the contributions,” Vogel said.
The Rentenpakett II will stabilise the level of pensions at 48% of the average wage until 2039, and create a reserve fund for equity investments of first pillar assets to slow down the contribution rate increase — the so-called Generationenkapital.
The FPD pushed during negotiations with its coalition partners to set up such a fund within the first pillar pension system, taking as a model AP7 in Sweden.
Hubertus Heil, minister for labour and social affairs, opened today’s parliamentary debate by saying that the government is reforming the first pillar for the 21 million retirees that have paid contributions and helped build and unify Germany, and for people currently employed, and the younger generation to protect them from poverty in old age.
With the generational capital, money is invested “wisely” to fend off the increase in contributions, with the first pillar under pressure due to an ageing population, particularly in the second half of the next decade, and stabilise the pay-as-you-go system, he added.
Markus Kurth, Green Party’s member of parliament (MP) said during the debate that the statutory pension system has remained stable over the years, adding that in Sweden, with the introduction of the capital-funded component, the level of pensions decreased, and private contributions “can be offset against the tax”.
Pascal Kober, MP for the FDP, responsible for social policies, said the party is “prepared for tough negotiations” in parliament over the pension reform.
Lars Klingbeil, co-chair of the SPD, warned the FDP against a blockade, adding in an interview with the dpa news agency that the reform is firmly anchored in the coalition agreement.
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