In the ongoing debate regarding pension reform, and specifically in response to the Social Democrats (SPD) for allegedly failing to fully implement the recommendations put forward by the Pension Commission, economist Martin Werding has put forward alternative proposals. The economics professor from the University of Bochum told newspapers of the Funke Media Group that anyone wanting to select key components from the Commission’s set of recommendations should correspondingly offer alternative solutions. For instance, he suggested giving up on the current halting line for the security level, which is extended until 2031.
Werding himself was one of the 13 members of the Age Security Commission appointed by the federal government, which presented 33 recommendations after months of work in June. He stated to the Funke newspapers that abolishing the halting line would, firstly, free up the federal budget from promises that are already unlikely to be met. According to him, “The unresolved needs in financial planning for 2029/30 far exceed the promised additional federal funds for the halting line. Put simply: the necessary money is not available at all.” Secondly, while the pension insurance system would not be directly financially relieved, its self-stabilization mechanisms could again respond to increasing demographic pressure. He explained that rising contribution rates and the shrinking number of contributing employees per pensioner would dampen annual pension adjustments, thus distributing the burden of aging between the young and the old.
Furthermore, Werding proposed that the “Mothers Pension III” should also be put back on the negotiating table. He stressed that if parties wished to stick to the Commission’s package, they would have to assume responsibility for finding and implementing other sustainable medium- and long-term solutions.
“In the discussions of recent days, there is much talk about what cannot be expected of older people,” Werding observed. “Nobody discusses what can be expected of younger insured individuals under the current pension law, nor the risks this currently creates for employers and employment development. Nobody discusses the ongoing demographic aging trend or the Pension Commission’s mandate to find consensus solutions for it.”
Recall that Federal Chancellor Friedrich Merz (CDU) and Labor Minister Bärbel Bas (SPD) had initially pledged to implement all 33 Commission recommendations, with Bas calling it a “total work of art” at the time. However, recently, various parts of the SPD, among others, have questioned the planned abolition of the tax-exempt pension after 45 years of contributions-known as the “pension at 63.”
