Opportunistic, well thought out, but highly risky – three attributes are suitable for characterizing the pension policy of SPD Chancellor Olaf Scholz and his traffic light coalition. Its cornerstones were fixed in the coalition agreement: no pension cuts and no further increase in the retirement age beyond 67 years. In addition, a pension level of 48 percent is permanently guaranteed, and the contribution rate should not rise above 20 percent in this legislative period. But not a single word is written there about demographic burdens that could make the statutory pension system precariously dependent on the federal budget in the future, as well-known economists warn. His purposeful optimism is also opportunistic, but it did help Scholz win the election.
Now the chancellor has received approval for his pension policy from the Federal Institute for Population Research. Its research director Sebastian Klüsener says: From a demographic point of view, he also sees no reason to talk about retirement at 68 now. It may not be considered until the next legislative period. After all, it is certain that retirement at 67 will gradually come until 2031. That’s why it’s now a matter of improving the financial situation of the pension fund with other means – through a higher labor force participation of women and older people, also through more “qualified” immigration. The same is true of the traffic light coalition agreement.
What is planned there falls into the category “well thought out”. But the question is whether that will be enough to cushion the impact of demographic change to such an extent that raising the retirement age is unnecessary. In any case, it is highly risky, because there are some arguments against it: while in the 2010s there were statistically three potential contributors to each pensioner, by 2030 there will only be 2.6. It may sound good to want to increase the number of women in the labor force, but it won’t be easy, as the level is already high today. Expanding it further requires, above all, a significant expansion of childcare. But that can take a long time.
Better healthcare and incentives for lifelong learning
The most difficult thing will probably be to keep older people in work longer. The traffic light wants to achieve this through better health care and more incentives for lifelong learning. But how much a federal government can misjudge the urge of people to retire is shown again by the pension with no deductions at 63 for employees with 45 years of contributions once introduced by SPD Social Affairs Minister Andrea Nahles. So far, around two million policyholders have opted for this, significantly more than calculated.
The pension politicians around Scholz are benefiting today from a clever course set by the then SPD Labor and Social Affairs Minister Franz Müntefering a decade and a half ago: it was he who raised the retirement age to 67 in 2007, which will be completed in 2031 . At the time, Müntefering was heavily criticized by his party. Today the chancellor SPD is living off it. Because without this intervention, the problems of the pension fund would be much greater – in 2035 two contributors would have to pay for one pensioner.
At the time, Müntefering was concerned that in view of the progressive aging of society, in the near future it would no longer be possible to make policies against the interests of pensioners, which would inevitably be at the expense of younger people. Since then, Germany has continued to age. Today, half of Germany’s eligible voters are 54 or older. They are unlikely to vote for parties that want to do something against the interests of retirees. Incidentally, even lowering the voting age to 16, as the traffic light wants to push through, would change little. The average age of the voters would decrease only slightly: from 54 to 53.4 years.
Therein lies the high risk that Scholz accepts with his pension policy: The SPD chancellor could go down in history – as the one who missed the last train to a solid pension policy. But should one wish him failure for that?