Criticism of the Pension Plans
28 leading German economists have warned in a joint letter to the chairpersons of the CDU, CSU, and SPD about a potential cost explosion in social security should the planned securing of the pension level and other measures be implemented. This warning has significant implications for the financial planning of savers and investors in Germany.
Implications for Financial Planning
The economists particularly criticize the SPD’s demand for securing the pension level at a minimum of 48 percent, the expansion of the mother pension, and the retention of the pension scheme at 63. These measures could incur additional costs of approximately 520 billion euros for the pension insurance over the next 20 years and increase the pension contribution rate by an additional 1.5 percentage points.
- Increased Burden for Contributors: An increase in the pension contribution rate would raise the financial burden on contributors, negatively impacting disposable incomes.
- Long-term Financial Planning: Savers and investors would need to adjust their long-term financial plans to accommodate the increased pension contributions. This could lead to a reallocation of investments to offset the additional costs.
- Generational Equity: The economists emphasize the necessity of securing the financial stability of the pension system to ensure that younger generations are not unduly burdened.
Signatories of the Letter
Among the signatories of the letter are well-known economists such as Veronika Grimm, Ulrike Malmendier, Monika Schnitzer, Martin Werding, and Christoph Schmidt. These experts underscore the importance of ensuring that the German pension system is sustainable in the long term to minimize the financial burden on contributors and especially younger generations.
Call for Reforms
The economists urge the upcoming federal government to discuss measures that enhance the financial stability of the pension system. They emphasize that the upcoming legislative period represents a last chance to establish a fair balance between contributors and pension recipients.