- Contributing to the pension fund could potentially proven beneficial for civil servants and independent workers.
Initially published in June 2024, we're sharing this content again.
As per the Expert Council's estimations, if independent workers were incorporated into mandatory retirement benefits, it would produce "minor yet beneficial impacts" during the 2030s. Upon their retirement, the advantage would lessen. However, by 2080, this integration would still exhibit slight favorable results. Even an extension to future bureaucrats could alleviate the pension fund's financial burden "in the short to medium term," provided only contributors are initially involved without any additional pensions being distributed.
The initial calculation suggests that this move would result in reduced contribution rates for all policyholders. "The favorable impact on contribution rates is likely to reverse due to the long-term higher pension benefits around the mid-2070s," the economists explain.
Funding the pension fund through taxes
Expanding the pool of participants is not a magic solution for rectifying the pension fund's situation. Moreover, the government might even offer an additional pension to officials, similar to those in the public sector, beside the usual pension. The average pension currently stands at approximately 3240 euros monthly - more than double the net basic pension. State expenditure on civil service pensions already surpasses 53 billion euros annually.
The funding won't simply vanish. Today's pensioners and active civil servants with pension claims will continue to live for many years. Indirectly, both civil servants and the self-employed finance the retirement benefits: through the annual subsidy from tax revenue, currently around 116 billion euros.
In the context discussed, introducing independent workers into mandatory retirement benefits may lead to minor yet beneficial impacts during the 2030s, but these benefits will lessen upon retirement. Despite expanding the pension fund's participant pool not being a magic solution, today's pensioners and active civil servants with pension claims will continue to rely on the fund, as both civil servants and self-employed individuals finance it indirectly through annual tax subsidies.
