Employer boss Rainer Dulger has spoken unpleasant truths about our pension system. Without fundamental reforms, it will collapse in a few years, says Dulger. And he’s right.
Employer boss Rainer Dulger is a man of clear words. His warning is unmistakable: Our pension system will no longer function in the next five years without fundamental reforms because the costs will explode. Dulger’s concern: The sentence “welfare state eats the future” could become reality.
“Well roared, lion”, one would like to say. Better still: “Really roared”. Because the President of the Confederation of Employers’ Associations (BDA) is by no means exaggerating. The traffic light coalition is continuing GroKo’s pension policy in a frightening way. Their motto, set out in the coalition agreement, is: “There will be no pension cuts and no increase in the statutory retirement age.”
In other words: We muddle through with minimal changes until the federal election in 2025.
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Now it borders on cheap polemics when the SPD, Greens and FDP promise something that no one of any importance is demanding, namely to cut current pension payments.
Without drastic changes, however, the pension level (ratio between pensions and earned income) threatens to fall. Which meant that the gap between final salary and pension is widening.
Politicians can try to hide reality; but they cannot run away from her. The BDA President clearly points this out: “There are currently around 50 pensioners for every 100 contributors, in 15 years there will be 100 contributors for every 70 pensioners. This means that the financing of our pension system is about to collapse. Everyone in the capital who is even a little familiar with statutory pension insurance knows that.”
In order to be able to maintain the current pension level, the pension contributions would have to rise significantly. Many employees could not shoulder that. It would also cause difficulties for many companies, since the employer always has to pay half of his employees’ pension contributions.
The way out is obvious: extending the working life. Dulger suggests just that. He wants to make the retirement age dynamic. In other words, with increasing life expectancy, the drawing of a pension should also be postponed.
Well-known pension experts advocate the formula of increasing retirement age by one year if life expectancy has increased by two years – even after the age of 67. The pension at 67 only applies to those born in 1964 anyway, i.e. from 2031.
When Dulger basically accuses politicians of cowardice (“Everyone in Berlin knows these numbers, but nobody dares to talk about them”), he is absolutely right. And also with his demand for a social reform “that has the dimension of monetary and social union after reunification.
But therein lies the problem. Governments tend not to impose anything unpleasant on people. At best, they pull themselves together when the undesirable developments can no longer be denied. Red-Green provided the best illustrative material for this.
The Schröder/Fischer government only dared to make cuts in the social safety net with “Agenda 2010” when the undesirable developments in the labor market and social policy could no longer be denied.
The problem with the method of focusing on firefighting instead of fire prevention has the disadvantage that the medicine has to be dosed more heavily the later it is taken.
For pension policy, this means that anyone who wants to avoid a further reduction in the pension level and unacceptably high pension contributions must address the third factor: the retirement age.
The BDA boss is right: In view of the demographic development with more and more pensioners and fewer and fewer contributors, the pension system in its current form is threatened with collapse.
It can no longer be saved with mini-reforms. Politicians must finally come clean with the citizens on this issue. Dulger addressed uncomfortable truths. What is needed now are pension politicians with courage – with the courage to face the truth.
