“We cannot allow ourselves to remove or reject individual measures,This is what Friedrich Merz said today after handing over the Pension Commission’s report. This includes 33 suggestions for stabilizing pensions in Germany.
The role model is Sweden. The law sets a 16 percent income pension for employees there. To do this, 2.5 percent of your pensionable income is paid into a fund. You can choose this yourself, otherwise the standard is the AP7 Såfa fund, managed by the Swedish state.
Another pillar of the pension system is the company pension scheme (bAV). This is offered by most Swedish employers as a unit-linked company pension. According to the Organization for Economic Co-operation and Development (OECD), 90 percent of all employees in Sweden receive such a pension scheme. Employees can also work as they wish beyond the earliest retirement age of 64 and thus increase their pension entitlements.
Employers’ opinions are cautious
The new plans are causing a lot of skepticism among the population. There are mixed reactions on the employer side. The human resources industry has received a statement from Matthias Kempf, President of the Federal Association of Human Resources Managers (BPM).
According to Kempf, the BPM fundamentally supports the combination of longer life expectancy and longer employment. However, the debate here falls short: “The real challenge is not just to extend working life, but to ensure employability until the end of working life.” Without appropriate transition options in companies, Kempf warns, postponing the retirement age will lead to more early retirement with discounts.
The BPM also considers the proposal of a protective pension for long-term contributors who are no longer able to work shortly before reaching retirement age for health reasons to be sensible. “This is also fair from an HR perspective and creates trust in the overall system.” At the same time, Kempf points out the impact that abolishing the pension at 63 could have on personnel planning. “The introduction of the protective pension must therefore be operationally precisely designed.”
The BPM is also critical of the abolition of the block model as a smooth transition from working life to retirement. This is currently a voluntary agreement between employees and employers. “From the BPM’s point of view, there is therefore no convincing reason to intervene regulatoryly here.” For the capital market-covered pension pillar, the BPM lacks the pay-as-you-go system that was used during the reform in Sweden. “As an additional contribution burden – without relief on the levy side – it represents a substantial increase in costs for employers, especially for SMEs.” The BMP’s conclusion: The active pension is a first step in the right direction, others must follow.
Fear of high costs
Employer President Dr. expressed similar fears. Rainer Dulger in a press release. A state capital pension makes sense in principle, but as a voluntary private and company measure and not a state-mandated measure: “Social contributions of significantly more than 40 percent endanger our location.”
Marcel Fratscher, President of the German Institute for Economic Research, also expressed criticism in an interview with ZDF. He sees the reform primarily as a burden on the younger generations. “We need a pension reform that does not redistribute more and more from young to old, but from rich to poor.” However, it is also wrong to only blame politicians. In a market economy, companies would also have to take more responsibility, “including for their own mistakes that they have made in the past.”
The German Pension Insurance Federation advised the commission on the report. Its president, Gundula Roßbach, classified the paper in a press release. The present reform proposals attempted to find a balanced relationship between an appropriate level of pensions, the limit on contributions for employees and employers and the amount of federal subsidies to pension insurance financed from tax revenues. “They can form a basis for the upcoming decisions on the future design of a cross-generational pension system. Now it is the turn of politicians.”
In Germany, a sovereign wealth fund or the Bundesbank will invest the insured person’s contributions in the future. However, according to the Pension Commission, an increase in pension levels is only expected from 2040.
Angela Heider-Willms is responsible for reporting on the topics of transformation, change management and leadership. She also deals with the topic of diversity.
