A leading German economic advisor has voiced significant concerns regarding the government’s proposed pension package, slated for cabinet approval this week. Veronika Grimm, a member of the German Council of Economic Experts, expressed skepticism about the measures’ effectiveness in addressing the long-term sustainability of the pension system.
In an interview with the “Rheinische Post” Grimm suggested the government has not fully grasped the severity of the challenges facing the system. She argued that the proposed reforms, particularly the expansion of the parental pension and the so-called “holding line” policy, are likely to increase expenditures considerably, placing a strain on the federal budget and adding to payroll taxes. Grimm cautioned that these developments are counterproductive at a time when Germany urgently needs economic growth.
Grimm advocated for more substantial reforms, acknowledging that such changes would likely involve adjustments to existing pension provisions. She specifically cited the need to link the retirement age to rising life expectancy, index pension increases to inflation rather than wage growth and reinstate a sustainability factor. Furthermore, she suggested adjustments to restrain the growth of federal subsidies to the statutory pension insurance, proposing measures such as foregoing the parental pension, abolishing the option of early retirement at age 63 and revising the calculation of widow’s pensions.
