When it comes to age, there are two attitudes among working people. Some worry about whether they will have enough money in retirement – and care. The others suppress this question with a guilty conscience. Sure, everyone is at least partially responsible for their own fate. However, both those who care and displaced people deserve politics to deal with something as central as old-age pensions. But that did not happen during Angela Merkel’s long chancellorship. Now it is up to the new government.
A few days after the election, in which Angela Merkel no longer ran after 16 years, the official statisticians published a forecast: In 2035, a quarter more people will live in Germany who are 67 and older – 20 million instead of 16 today. At the same time, the number of employees is shrinking. How can decent pensions be financed?
This development was foreseeable. But under Merkel’s chancellorship, which lasted half a generation, politicians hardly reacted. Only three things stand out positively: The retirement age 67, because a society that lives longer has to work longer. And the higher pensions for the disabled and the basic pension for low-wage earners, because both groups are often poor. However, the smaller coalition partner pushed through all three, partly against Merkel’s Union. The Chancellor owed the Germans the big answer to the future question of old-age security.
Her predecessor Gerhard Schröder showed more ambition. The SPD chancellor slowed down pension increases due to increasing aging. The gaps in retirement should be filled with a Riester pension funded by the state. The first part worked, Schröder saved the employees from significantly higher payments into the pension fund. The Riester pension, on the other hand, is well-intentioned, but badly made. Three quarters of citizens have not signed any of the contracts, which are often expensive and yield little. Low wage earners are almost 90 percent riesterless.
On average, 700 euros are missing every month
With millions of Germans, money threatens to run out in old age. For every second person who will retire in the next few years, statutory and company pensions are nowhere near the same as their previous standard of living. On average, 700 euros are missing every month. Many people will be afraid of old age, also because of higher rents. This is a state of affairs that a rich country should not accept.
The old-age insurance needs a triple update by the new government. At Riester you need a cost-effective standard product. And the state should organize that the money goes primarily into stocks and real estate. Otherwise too little will flow back to retirees in old age. As soon as there are good Riester contracts – but only then – the state can oblige to take precautionary measures. Because without such contracts, most people cannot compensate for the gaps in the statutory pension.
Remarkably, most of these ideas were already being pursued by the person who invented subsidized provision. When the labor minister at the time, Walter Riester, was planning a cost-effective standard product, the financial sector threatened to boycott. Riester complied so as not to endanger the whole reform. When he was considering a precautionary obligation, a campaign broke out by the opposition and the image– Newspaper los (“Zwangs-Rente”).
The new government must now show more assertiveness. The update also includes the fact that she thinks about the low wage earners. Many of them can hardly afford to save for retirement, they need higher subsidies.
The third thing that remains is the effort to stabilize the statutory pension fund so that pensions do not melt through more senior citizens and fewer employees. Everyone should contribute to this feat: the elderly through lower pension increases, employees through higher social contributions, civil servants through the cuts that have not yet materialized – and society as a whole through subsidies from tax revenues. Yes, those companies and rich people who like to avoid taxes should feel addressed.