Shortly before discussing its pension package, the coalition is concerned with the future of pensions: Should people be motivated to work until they are 72? Do we need more supplements for poor pensioners?
FDP parliamentary group leader Christian Dürr has drawn criticism with comments about working at the age of 72. In connection with the currently planned pension reform, the coalition should “at the same time decide to make retirement more flexible so that people can voluntarily work longer,” said Dürr in the “Bild” talk.
This provoked criticism from SPD leader Saskia Esken and the German Trade Union Confederation (DGB). At the same time, Esken brought up a possible expansion of the basic pension introduced three years ago to provide greater support for poorer pensioners.
Dürr referred to Sweden, where the retirement age is flexible and the old-age pension can only be applied for from the month in which you turn 63 at the earliest. When asked whether he wanted to encourage people to continue working at 72 or 73, Dürr said: “Why should I forbid someone from working at 70 or 72?” That would be downright age-discriminatory.
“There is no rigid age limit”
SPD leader Saskia Esken then attested to Dürr’s “lack of respect for those who have done wrong” and “half-baked or completely wrong information.” “After looking at the social security code, it should be clear to everyone: There is no rigid age limit,” Esken told the German Press Agency. “Pension is only available upon application and no one is forced to apply for a pension.”
The German Pension Insurance has noted: “Many insured people assume that they will have to retire when they reach their standard retirement age at the latest. However, that is not true!” You can also work beyond the normal retirement age, according to the pension insurance company on its homepage. The amount of the future retirement pension increases for each month. Insured persons also receive surcharges of 0.5 percent per month.
DGB accuses Dürr of “ghost debates”.
“Even those who already claim a statutory pension can continue to work, with unlimited earnings, as we have lifted the previous additional earnings limits,” emphasized Esken. However, many could not or did not want to continue working after decades of hard work – “that is also their right,” says Esken. There will be no increase in the retirement age with the SPD.
DGB board member Anja Piel accused Dürr of “ghost debates” that had little to do with the reality of work and life for the majority of employees. “The recurring reference to Sweden also sounds like “Oh, how beautiful Bullerbü is”.” Many would not be able to work beyond the normal retirement age or would have poor working conditions.
6.3 million pensioners subject to tax
Around 244,000 pensioners no longer have to pay taxes this year because they benefit from the increase in the basic tax allowance. A spokesman for the Federal Ministry of Finance announced this upon request, the “Süddeutsche Zeitung” first reported.
The basic tax allowance applies to all taxpayers and refers to the annual income up to which no tax has to be paid. At the turn of the year it rose by 696 euros to 11,604 euros. At the same time, 114,000 pensioners would also be new taxpayers due to the pension increase coming in July.
“Taken together, around 6.3 million people would remain in the “taxpayers with pension income” category in 2024,” the spokesman explained. In total there are around 21 million pensioners in Germany. SPD leader Esken noted that, conversely, this means that around 15 million pensioners receive so little pension that they do not have to pay taxes on it – as a result of marginal work or low wages. She viewed this as a “strong argument” for stabilizing the pension level beyond 2025 as planned.
Esken is considering expanding the basic pension
In this context, Esken also brought an expansion of the basic pension into play. “If we in the coalition are looking for further ways to improve the situation of people with low pensions, then it would make sense to increase and expand the tried and tested basic pension,” said the SPD leader.
The basic pension law came into force on January 1, 2021 after a long dispute. Around 1.1 million pension payments were increased by an individual supplement as of December 31, 2022.
Federal Labor Minister Hubertus Heil (SPD) and Finance Minister Christian Lindner (FPD) are currently coordinating plans for a pension package in the government that will stabilize pension levels. To support the pension fund, which is coming under increasing demographic pressure, the government also wants to invest at least 200 billion euros on the capital market by the mid-2030s.
Nevertheless, the pension contribution rate is expected to rise from the current 18.6 percent to 22.3 percent by 2045. Pension spending is likely to climb to around 800 billion euros due to the aging of society and the planned fixing of pension levels. The plans will soon be discussed in the cabinet and then in the Bundestag.