Pension plans by Andrea Nahles from 2018 financed more heavily from taxes

Monday, 13.01.14 , written by Christian Hafler The improvements in the statutory pension are an important part of the coalition agreement. But now Federal Labor Minister Andrea Nahles makes clear that the plans are not feasible without funding from tax revenue. The pension package should therefore regulate higher tax subsidies from 2018 onwards. However, there are no tax increases, the 

 Mütterrente und Rente mit 63 im Rentenpaket von Andrea Nahles

Pension plans by Andrea Nahles: Financing from contributions or taxes

Andrea Nahles has yet to present its bill for the financing of pension plans from 2018 from tax revenue. But already it hails criticism of the financing plans for the pension. The coalition partner Union urges Nahles to seek to implement the pension plans themselves, rather than worrying about funding in the next legislative period. For example, Nahles plans to present a bill on the pension package at the end of January. The purpose of this legislative proposal is also to regulate the tax financing of the pension plans. In the long term, it is hardly possible to finance a maternity pension and a pension of 63 from contributions to the statutory pension insurance scheme. In order to avoid substantial increases in contributions, therefore, an increased subsidy from tax revenues must be made from 2018 onwards.

Mother’s pension has to be financed by all citizens

The coalition agreement has already set an increase in the tax subsidy of € 2 billion to € 81 billion a year. According to the Federal Ministry of Finance, this will be sufficient by 2017 to finance the current expenditure on pension insurance. For example, the Chairman of the CDU / CSU SME Association, Carsten Linnemann, admits online that the mother’s pension is a “total social benefit” and must therefore be financed by taxes. Tax increases are not necessary for this, but the money should be made available by savings elsewhere. SPD leader Sigmar Gabriel also emphasizes that the mother’s pension must be financed permanently from the federal budget.

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Pension package of Andrea Nahles permanently dependent on tax funds

The Nahles pension package includes several measures. For example, the mother’s pension should be better for older mothers with children born before 1992. Only the mother’s pension will burden the statutory pension fund with approximately 6.5 billion euros per year. Even the non-abusive pension at 63 and the improvements in the disability pension lead to higher costs. To finance this, the Grand Coalition suspended the planned reduction in the 2014 pension contribution. However, this is not enough for long-term financing. In general, contributions to pension insurance can only be kept stable if the German economy continues to grow.

Future of the German pension

Even without the planned improvements in the statutory pension, it is questionable how the benefits for the legally insured can be financed in the long term. Especially the young professionals of today can no longer rely on a sufficient retirement pension in the same way as their parents or grandparents. Private old-age provision is becoming increasingly important alongside statutory benefits. In the past private preventive efforts, such as the Rürup pension, have been further improved. Because without private provision threatens many citizens later age poverty.

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  • Christian Hafler
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