"Insincere" - Business associations fiercefully condemn proposed pension overhaul
German economy critiques the proposed pension plan, labeling it short-sighted and unrealistic. The pledge to maintain a pension level of 48% by 2039 is criticized by President Rainer Dulger of the Employers' Association on Friday, citing the current population complications. He further mentions that the young generation and businesses are bearing the brunt, making work increasingly less appealing.
The German Parliament debated the so-called "Rentenpaket II" from Hubertus Heil's (SPD) Labor Minister portfolio on Friday morning. The plan aims to maintain a pension level of 48% of average income until 2039 and introduces a capital-backed pension system pillar, referred to as "Generationenkapital". The future returns from this capital will later be utilized to cover pension payouts.
However, within the coalition, disagreements persist regarding the pension plan, mainly concerning its financial implications. The reform will result in a "slow but tolerable increase in the contribution rate" from 2028 onwards, as per the bill. By 2045, it is predicted to escalate to 22.7%. With the anticipated profits from Generationenkapital, this may decrease to 22.3%. The current contribution rate, split between employees and employers, is 18.6%.
In contrast, Dulger advocates for "long-term, sustainable reforms in occupational and private pension provision." Brodtmann, VDMA's CEO, adds to the criticism, stating that the pension plan makes "promises at the expense of contributors." He suggests that young people and businesses should tackle the unresolved problems that politics hasn't strategically addressed.
The Association of Young Entrepreneurs terms the reform as a "slap in the face for hardworking young individuals." The reform places an excessive burden on employees, particularly young workers, without holding pensioners accountable. Instead, the burden should be "fairly distributed between the young and the old."
The German Parliament is currently debating the pension reform proposal, known as "Rentenpaket II," which aims to maintain a pension level of 48% by 2039. However, President Rainer Dulger of the Employers' Association criticizes this plan, suggesting that it's short-sighted and unrealistic for the pension reform to solely rely on the proposed "Generationenkapital" system.
