Berlin Friedrich Merz calls for a comprehensive reform of the pension system: “The pension system cannot be maintained in its current form in view of the demographic development,” said the CDU chairman to the Handelsblatt. Talking about a longer working life is not enough for him.
He wants “a holistic view of the topic of pensions and work. The discussion about whether we should work until we are 68 or 70 is of little use to us. That may end up being part of the result, but not the beginning.”
Merz reacted to a debate that started within the party and at the same time criticized the federal government. This adheres to the current pension system. The CDU, meanwhile, is discussing a basic program in which old-age provision should receive “a special chapter”, as the party leader says. The business-oriented Mittelstandsunion (MIT) has drawn up a first position paper.
The federal board of directors is to decide at a closed meeting at the end of the month. It is about “a fundamental reorientation of old-age provision in Germany, which in future can only function with three strong pillars: statutory pension insurance, company and private old-age provision”.
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The working life should increase
The paper brings with it internal party disputes. MIT wants to enshrine the principle of intergenerational justice in the Basic Law. Specifically, she proposes linking the standard retirement age to life expectancy in a ratio of three to one from 2031. If people live three years longer, they should work one year longer. But it should be easier to retire sooner or later. This is “just and explainable”.
MIT no longer considers the debate about the “pension level”, i.e. the amount of the pension in relation to the last salary, to be up-to-date. She wants to talk about a “pension level”. This is intended to include all retirement income, not just the state pension. “Someone can get a small pension and still be wealthy in old age. The cross-pillar pension information is an important building block,” says the paper.
At the end of 2021, she was elected the new federal chairwoman of the Mittelstands- und Wirtschaftsunion (MIT).
(Photo: dpa)
The CDU economic wing wants to make company pensions more attractive and give employees a better share in the company’s success. Party leader Merz already called the capital investment “the last big promise” that his party has not kept to this day. MIT demands that the state should support it with an allowance of “at least 5,000 euros a year”.
MIT also proposes raising the savings allowance to 4,500 euros, as well as promoting home ownership and developing the Riester pension into a “family pension”. Children should already learn everything about shares as part of their retirement provision at school.
Gitta Connemann, MIT Chair, told Handelsblatt: “A debate on pension reform is inevitable for the new policy. No matter what answers we give: we have to look at the realities. And this includes the fact that people are getting older and the number of young people is falling compared to older people. At the same time, we already have the highest tax ratio internationally.”
CDA warns of “soup kitchen welfare state”
The Christian Democratic Workers’ Union (CDA) in the CDU reacted clearly. “This paper makes it clear what some people imagine under the term ‘bourgeois’ in the new basic programme: an unrestrained economic liberalism with an attached soup kitchen welfare state,” CDA Vice Dennis Radtke told the Handelsblatt. “Pension insurance without solidarity is just as unthinkable as a people’s party without an antenna for the lifetime achievements of millions of workers.”
Radtke considers changes in pension insurance to be imperative. For example, the Riester pension “failed with a bang” with a view to small incomes. The CDA therefore called for “an additional pension for low earners to be financed by the state, companies and employees”.
Read more Handelsblatt articles on pension policy here
He warned against questioning the pension again at 67. “Something like that doesn’t solve any problems and destroys trust.” It is more important to help those who cannot work until they are 67. “Improvements in the disability pension are as important here as an initiative by the social partners to promote healthy working in old age,” Radtke demanded.
In order to combat the threat of poverty in old age, he too believes that home ownership is a good solution. “We need concrete measures such as hire-purchase models so that people with small incomes can also live in their own property in old age.” The social politicians of the CDU parliamentary group Markus Reichel and Kai Whittaker call for a “social security tax” that is also due on capital income.
CDU Vice Linnemann urges unity
The federal government wants to keep the pension level stable at 48 percent and build up a capital stock with a starting capital of ten billion euros in order to continue to finance the pension. MIT rejects both, but not the CDA. “Introducing a share-based pension for newborns, with the state providing seed capital, has had great success in Britain,” said Radtke.
Radtke also considers changes in pension insurance to be imperative.
(Photo: IMAGO/Future Image)
Party leader Merz makes it clear: the federal subsidy for pension insurance cannot continue to increase. “The federal budget simply doesn’t give it anymore.” Rather, he calls for “additional funded elements to the statutory pension insurance as quickly as possible.”
The head of the basic program commission, party deputy Carsten Linnemann, appealed to the wings: “We should stop with the old wing thinking and think and act as a union,” he told the Handelsblatt. Linnemann was chairman of the Mittelstandsunion for eight years and left office at the end of 2021 to become deputy to party leader Merz and coordinate work on the basic program.
The trained economist says: “As we get older, I think it is clear that the working life for those who can work longer must be increased. At the same time, those who can no longer work at the age of 58 must be given targeted help – and with full force.” The policies of the past few years have not been targeted and have therefore been “the wrong instrument”. “Basic pension, mother’s pension or pension at 63 were watering can policy.”
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