Germany’s biggest union, IG Metall, has spoken in favour of a moderate increase in pension contributions as one step to strengthen the first pillar pension system (Deutsche Rentenversicherung).
“For the younger generation, this [a moderate increase in contributions] is significantly cheaper and safer than trying to avoid politically created pension gaps with expensive private [pension] contracts,” the union said in a statement.
The German government is trying to reform the first pillar pension system through the so-called Generationenkapital, or Aktienrente concept, to avoid an increase in terms of contributions.
IG Metall is standing against the Aktienrente, in favour instead of a system based on “real solidarity”, and open to all employees, including civil servants and self-employed who are starting out their careers, it said.
“In the medium term, this creates a financial buffer for the time when the baby boomers retire,” it added.
Labour market reforms are necessary to counter the pressure put on the pension system by an agreeing society. Increasing the participation of women, often working part-time, and immigration can help reinforce the pension system, according to IG Metall.
Last year, the parliament (Bundestag) passed the Skilled Immigration Act to make it easier for skilled workers to migrate to Germany to work, as companies struggle to find qualified specialists.
IG Metall has also accused “business lobbyists” of making false claims, saying that, for example, pensions are on the verge of “collapse”.
The union has cited interests behind such statements like those of the employers that would slim statutory pensions to a minimum, forcing people to sign up for private pensions, because employers help finance statutory pensions, it said.
“This is where things get political. Alarming predictions about the country’s aging population have repeatedly proven to be wrong. Some seem almost absurd from today’s perspective,” the union said in the statement, referring to a 1985 cover of Der Spiegel magazine with the headline “Pensions in danger”.
Today’s contribution rate – 18.60% of wages – is lower than the contribution rate in mid-80s (18.70%), IG Metall said pointing at figures published by the Federal Ministry of Labour and Social Affairs (BMAS).
The share of public subsidies paid to the first pillar Deutsche Rentenvericherung has been largely constant for 20 years – and is lower than when the pay-as-you-go system was introduced at the end of the 1950s, it added.
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