Economists Warn of Cost Explosion in Pensions
28 leading German economists have addressed a letter to the party leaders of CDU, CSU, and SPD to warn against a possible cost explosion in the pension system. This warning particularly targets the SPD’s demand to secure the pension level at a minimum of 48 percent, the expansion of the mother’s pension, and the commitment to the pension at 63.
Background and Concerns
The economists argue that the planned measures could lead to additional costs for pension insurance of about 520 billion euros over the next 20 years. This would increase the pension contribution rate by an additional 1.5 percentage points. They emphasize that such expensive service expansions should be avoided to ensure the financial stability of the system.
Impact on Savers and Investors
- Increased Pension Contributions: An increase in pension contributions could reduce the disposable income of employees, negatively affecting their saving behavior.
- Changed Investment Strategies: Given rising social security contributions, investors may need to adjust their investment strategies to secure the long-term profitability of their investments.
- Long-term Financial Planning: The uncertainty regarding future pension benefits and contributions could lead savers and investors to rethink their long-term financial plans and consider alternative retirement savings options.
Demands of the Economists
The economists demand that the incoming federal government discusses measures that increase the financial stability of the pension system. They emphasize the need to create a fair balance between contributors and pension recipients to make the German pension system sustainable in the long run.
Other Economic Challenges
In addition to the challenges in the pension system, Germany and the world economy face further challenges, such as the escalating trade dispute between the USA and China, leading to global economic uncertainties. Furthermore, municipal finances in Germany are strained, which is exacerbated by wage agreements in the public sector. These factors could further influence economic stability and investment decisions.