In place of employee benefits, - The administration's misrepresentation of the pension issue
The motive behind this is the proposed pension package II that Chancellor Olaf Scholz, aged 65 and belonging to the SPD, intends to get the cabinet's approval this week. Its intention is to maintain the pension level till 2039 while simultaneously raising contributions (effective from 2028). Additionally, billions are slated to be invested in the stock market for the first time to ease some pressure on the pension fund (equity pension).
The government is experiencing a tussle with Finance Minister Christian Lindner, aged 45 and a part of the FDP. There is a possible implosion on the horizon. The government is misleading millions of workers by assuring them of a secure pension that doesn't exist with Pension Package II!
1. Skyrocketing pension costs!
The second pension package will significantly increase employee (along with their employer's) contributions to the pension fund: from the present 18.6% to 22.3% by 2035. An acceleration of 20%!
For instance, an employee earning around €3,000 gross monthly salary would experience a reduction of €57 in net pay on their salary slip.
The SPD and Greens in particular appear disinterested. They focus instead on highlighting the benefits of a stable pension level for the elderly.
2. A looming retirement age dilemma!
So far, two workers would be contributing to the pension fund for one retiree. However, by 2030, the labourers would need to provide for nearly 1.5 pensioners. A significant issue! Regrettably, the second pension package has been inadequate in addressing this thus far.
The FDP political group in the Bundestag is now pushing for later retirement ages. For instance, there could be limitations on retiring at 63, and voluntary retirement could be possible beyond the age of 67. The objective is to relieve the strain on the pension fund and therefore on contributors by delaying their retirement initiation.
"Ridiculous", says the Chancellor. His SPD is also thwarting a later retirement age. Conversely, some Greens have become receptive to the concept of later retirement.
3. The new equity pension isn't game-changing!
Resisting considerable opposition from the SPD and the Greens, the FDP has negotiated a new component into Pension Package II: it plans to spend billions in tax revenue (or loans) on the stock market, with €12 billion earmarked for this year and €200 billion by 2035.
Predicted returns from 2036: ten billion euros. Notably better than nothing! However, when compared to the total pension payments amounting to approximately €400 billion yearly, it is relatively insignificant.
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Source: symclub.org
