The Audit Court is issuing a warning concerning the pension plan.
The Federal Audit Office has voiced its concerns over the government's pension plans, claiming that the pension package II will lead to considerable increases in pension insurance expenditures. By 2045, the total pension fund expenses are projected to reach 507 billion euros, leading to an average annual increase of 25 billion euros in pension expenditures. This surge in costs could result in a significant rise in contribution rates.
The Federal Audit Office's report suggests that the costs of the pension package II surpass the expansion in performance of the previous decade. The primary cause of the rising costs is the government's plan to maintain the pension level at 48 percent, resulting in pensions that are 6 percent higher than the current law by 2045.
As a consequence of these additional expenditures, the pension contribution rate is expected to climb by more than four percentage points by 2045, according to the report. The creation of the debt-financed intergenerational capital, which is set to contribute around 10 billion euros to the pension fund annually starting from 2036, offers only minor relief. The pension contributions will be lowered by a maximum of 0.4 percentage points. The contribution rate is projected to be 22.3 percent in 2045, compared to the current 18.6 percent.
Government: "Contribution increase justified"
The Ministry of Labor considered the increase to be justified in a statement to "Der Spiegel". However, the Federal Audit Office did not share this perspective. There is also the risk of value loss associated with the new intergenerational capital, warn the auditors. The federal government will borrow an additional 366 billion euros for the pension fund by 2045, which could potentially impact its creditworthiness, they caution.
The Federal Audit Office argues that the pension fund's benefits should not be compromised for long-term pension financing. However, the pension package II appears to be heading in the opposite direction, the auditors contend. It benefits older and middle generations by providing them with higher pensions, while younger and future generations are left bearing the brunt.
The Bundestag is scheduled to debate the pension package in its initial reading towards the end of September. The delay in decision-making within the traffic light coalition ended last week, with FDP leader and Finance Minister Christian Lindner stating that the package was "negotiated and consensus-ready". The SPD leadership has recently expressed a desire for a swift decision. However, there are still numerous critics within the FDP and Green factions. Therefore, the passage of the package is also viewed as a test of Lindner and Habeck's influence within their parties and factions.
The government's justification for the contribution increase largely stems from the pension package, which is projected to significantly increase pension insurance expenditures. The concerns raised by the Federal Audit Office indicate that the pension package may lead to compromises in the pension fund's benefits for long-term pension financing.
