Marcel Fratzscher, the head of the German Institute for Economic Research (DIW), has strongly criticized Chancellor Merz’s announcement regarding the shift in the capital pension plan. According to Fratzscher, this shift constitutes a “setback for a sustainable and intergenerational reform of statutory pension insurance.” Fratzscher told the “Rheinische Post” that reliable retirement provision is essential, particularly for young people and those with low incomes and savings. He emphasized that this system should not rely solely on the pay-as-you-go structure but must also leverage the opportunities presented by the capital markets.
The DIW chief anticipates that the pension reform recommended by the expert committee will now not be implemented fully, noting that the promise to pass the reform as a comprehensive package seems to have been abandoned. Although Merz initially stated at the beginning of the weeks that he intended to approve the core elements of the pension reform in the cabinet before Christmas, the current approach is only to set out key guidelines for the capital-supported component initially.
