The demand of the German Trade Union Confederation (DGB) for a permanent stabilization of the pension level at 48 percent is a central issue in current pension policy in Germany. DGB chair Yasmin Fahimi reaffirmed this position before the coalition committee and emphasized that such a regulation should not only apply in the short term but also for future generations. The current political agreement provides for a stabilization until 2031; however, the DGB demands long-term security for all insured individuals.
Background and Significance
The pension level refers to the ratio between the average pension of a standard retiree and the average income of all employees. A level of 48 percent means that the standard pension constitutes about half of the average income. The federal government is currently planning to secure this level until 2031 – but without a guarantee beyond that.
The DGB argues that this is not sufficient: A permanent stabilization is necessary to provide people with planning security and to prevent old-age poverty. Especially in light of the demographic development – an ever-decreasing number of contributors is facing an increasing number of retirees – financing the statutory pension becomes a challenge.
Impact on Savers and Investors
For savers and investors, the discussion about the pension level has direct consequences:
- Planning Security: A permanent commitment to a certain pension level would make it easier to adjust private savings plans. Those who know how high their statutory pension will be can save or invest more strategically.
- Need for Private Provision: Even with a stabilized level of 48 percent, the statutory pension often is not enough to maintain the accustomed standard of living in retirement. Therefore, private pension provision remains indispensable.
- Financial Burdens: To secure the desired level in the long term, social contributions may increase, or tax funds may be used more to finance pensions. This could affect disposable income and therefore also saving potentials.
- Inflation Risk: A fixed percentage level does not automatically protect against loss of purchasing power due to inflation. Additional measures are required here.
Political Debate
The debate about the pension level is closely linked with other social policy issues:
- Civil Servant Pensions: There are considerations (and rejections) to include civil servants in the statutory pension insurance – which, however, would involve significant costs.
- Working Time Laws: The DGB rejects relaxations and instead demands more investments in infrastructure as well as social security for employees.
- Care Insurance: Here too, the DGB calls for reforms to avoid old-age poverty due to high personal shares in care situations.
Conclusion
The DGB’s demand for a permanent stabilization of the pension level at 48 percent is an important impetus for German social policy. It aims to reduce planning uncertainties and counteract old-age poverty – with direct impacts on all citizens, particularly on savers and investors concerning their private pension provision.