After months of discussions, the cabinet wants to approve the second pension package today. This will keep the pension level stable at 48 percent and build up generational capital. Critics say the package is not fair to all generations.
Christian Lindner sits on a light blue cardboard stool. The event is almost over, but now he wants to say something. It’s about pension law, and he’s fully in line with the SPD: “I just want to thank Mr. Heil for his great work! Pension law has really developed superbly!”
Around 130 citizens are sitting around Lindner. It is Monday evening, a discussion format with Labor Minister Heil. He is delighted to see the man from Bautzen – a pension consultant with, of all things, the same name as the FDP leader: “I would love to take you with me to Berlin. Then you could advise the other Christian on pension policy issues!”
There are still around 40 hours until the federal cabinet discusses the pension package. Sitting opposite Heil today is the Federal Minister of Finance. The real Christian Lindner, so to speak. The pension package is their joint project. They have been wrangling over it for months, and it is a matter close to both of their hearts.
The pension level should not fall below 48 percent
The SPD is concerned about the limit on pension levels – for the party, this is part of its social brand core: it should remain at at least 48 percent until 2039. Without the reform, the pension level would fall to 45 percent, according to the pension insurance. And in order for pensioners to get more money, according to the pension insurance, either contributions must rise or the state must contribute more tax money – or both.
The draft law stipulates that pensions should not rise more slowly than wages. This means that the sustainability factor is permanently suspended. For example, it would have dampened the pension increase in 2024 by 0.16 percentage points, the pension fund calculates. This is because it should ensure that the pensioner and contributor generations share the costs of demographic development. Heil said in Bautzen that what bothers him is “what I read every day in the pension debate: you are creating a pension package at the expense of the younger generation.” That is not true.
Lindner: Reform is long overdue
Florian Maier is one of those who have to pay it. For the student, his pension is at least 43 years away. It’s unreal. He is the chairman of the Stock Exchange Association at the University of Darmstadt. When it comes to talking shop about shares and investing, his voice comes alive. But pensions? He thinks for a moment. “I have great confidence,” he then says. A lot can change in 43 years. And: There are many people who have worked very long and hard – in the belief that they will receive a certain pension. “If the pension level were to be reduced now, I wouldn’t think that was fair either,” he says, counting on the fact that it will be possible to counteract contributions in the long term.
Finance Minister Lindner likes to explain how this could work, especially to students. A few days ago he jumped onto the podium at the Humboldt University in Berlin. He was 15 minutes late. Just like the repairs to the pension system, Lindner says: “It should have been done 25 years ago, but the second best time is today.”
The pension package II – not generation-appropriate?
He is concerned with the FDP’s heartfelt concern. The state should establish a foundation called “Generational Capital”. It will receive twelve billion euros annually, financed from debt. The foundation will invest the money in the stock market, so that the total capital will grow to a sum of 200 billion euros by 2036. From 2040, the foundation will transfer ten billion euros in returns to the pension fund every year. According to their estimates, this will mitigate the increase in contributions by 0.4 percentage points.
The package is not without controversy even within the FDP. Deputy chairman Johannes Vogel called it “not fair for all generations”. He proposed a share pension based on the Swedish model, in which every employee must invest part of their contributions in shares. But that is unlikely to work with the SPD, which does not want to see contribution money invested in shares. In any case, Lindner pointed to what has been achieved on the podium at the university in Berlin. Generational capital is a “historic change”: “For the first time, we are using the instrument of capital funding in the first pillar of our pension scheme.”
“Every parcel shop is more solidly financed than this pension package”
For the opposition, this is a template: “The traffic light coalition is gambling with pensions because the shares are financed on credit,” says CDU pension expert Kai Whittaker, who proposed a share-based child pension a few years ago. “Every parcel shop is more solidly financed than this pension package.”
But the ministers are already talking about the next pension reform. Heil’s Ministry of Social Affairs wants more and stronger company pensions, and a specialist dialogue between the Ministry of Finance and the Ministry of Economic Affairs has now been concluded. And Lindner is announcing a successor to the Riester pension: private share portfolios with tax incentives. Perhaps this could be discussed in parliament as early as September, he explains to the students in Berlin.
Florian Maier, a student from Darmstadt, doesn’t want to wait for state funding. His grandfather gave him a share portfolio for his 18th birthday, which was essentially his personal generational capital. He now pays a little into it every month in order to have a buffer later on. So that he is prepared in case his pension is not enough.