Germany’s baby boomers are retiring. Born between 1955 and 1969, when the birth rate was at an all -time high level, also living for a long time. The workforce is not growing at the same rate.So who will pay the pension of the elderly? A significant part of the federal budget goes to advancing the State-Pension System and the new Labor Minister, Center-Left Social Democratic Party (SPD), to carry forward the new Labor Minister Berbel Bass, reiterating an idea of how to fix it partially.The pension system in Germany, established in 1889, is based on a public retirement insurance scheme in which the pension of the current retired people is currently paid using insurance contributions from employed employed, a system known as “International Contract”. They are not bound to contribute self-planned; They can voluntarily pay in the state pension system or opt for private pension.Public Pension Scheme, also known as legal pension insurance, is mandatory for employees only. Self-planned state systems can pay or rely on completely private insurance schemes. Civil servants have their own pension system. Both these groups form about 12% of the working population. Many left-wing politician politicians emphasize the only way to save the system operated by the state, saying that all the members of these well-paid groups have been forced to pay in the state retirement fund.
Bärbel Bas floats an old idea
The new minister of the Central-Vam Social Democratic Party (SPD), Bärbel Bas, has again flown the idea.“We need to involve more people in the financing of pension insurance,” Base told newspapers Funke mediangrippe In the weekend. “Civil servants, members of Parliament and self-employed people should also pay in the pension insurance scheme,” he said. His proposal rubbed wings with SPD coalition partners, Center-rights Christian Democratic Union (CDU) and Christian Social Union (CSU), who dismissed it as a short-term solution.The new coalition government of Germany has vowed not to cut old age pension, or increase pension contribution or increase the retirement age beyond 2029.Pensioners constitute a fairly more growing voter base, especially for SPD, CDU and CSU.But the approach is severe: in the early 1960s, there were still six active insured workers for every old age pensioner. Now that ratio is 2: 1, and is drowning further.
Germany’s statutory pension system, explained
The contribution of 18.6% of an employee’s gross monthly salary goes to the state retirement fund, in which employees and employers pay half of each. Monthly contribution may not exceed € 1,404.30. The government hopes that the contribution rate from 2028 will increase by 20%, going up to 22.3% by 2035, where it expects it to be till 2045.Current “Pension Level” – The amount paid to retired people each month is 48% of the average monthly salary in Germany, one percent of the federal government wants to guarantee in law with “level conservation section” by 2040.According to German Pension Insurance, in 2023, the average old age monthly pension in Germany was € 1,550.
What will happen if the state pension is not enough?
Current data of German pension insurance shows that 61% of pensioners receive less than € 1,200 per month from their statutory state pension. One of the three pensioners receives less than € 750. Many women in Germany get very little pension, or none. This is because he worked in low-paying jobs, and many people also spent a house living at home, often do not return to work for a long time after having children. It is not easy to recreate the labor market after many years, and not enough for many pension to end. They work to either supplement their pension or get state welfare benefits.Apart from the government -run statutory pension insurance system, there are many options for private company’s schemes and personal personal retirement investment schemes. Along with the periods of contributing employment, children are counted towards pension in spending time, education, unemployment or disease.Foreigners working and paying in Germany for more than 60 months are entitled to receive German pension after reaching the official German pensionable age.
Waiting for new proposals
The new government has agreed to establish the Pension Commission and make a proposal. According to BAS, it will now be faster.The previous Finance Minister of the newlywist Free Democrats (FDP) Christian Lindner suggested that the government should take a loan of € 12 billion annually and invest in the stock market. By the mid -2030s, Lindner stated that the stock must be at least € 200 billion to help support the statutory pension scheme. At that time, the SPD thought was lukewarm at the idea, the CDU/CSU which was then in protest, dismissed the proposal as insignificant.
