Coalition argues again over basic pension schedule

Hubertus Heil

The SPD rejects the demands of its coalition partner to stop the basic pension plans.

(Photo: dpa)

Berlin In the middle of the corona crisis, a new dispute over the basic pension broke out in the coalition. Leading SPD politicians rejected calls from the Union on Friday to rethink funding and the timing of the basic pension in the face of the pandemic.

“Questioning the basic pension at Easter and in times of Corona is evidence of a lack of political responsibility,” said SPD parliamentary group leader Katja Mast of the German Press Agency in Berlin. “Whoever applauds everyday heroes shouldn’t forget them even after the crisis.”

The head of the labor and social work group of the Union faction, Peter Weiß (CDU), told the magazine “Focus” that the financing of the basic pension in the form previously planned could not be realized. “We have amassed a huge mountain of debt to deal with the corona crisis. Therefore, we have to sit down in the coalition after the pandemic and take a closer look at the financing, ”he said.

The schedule for the entry into force of the basic pension must also be reconsidered. Union faction vice Carsten Linnemann (CDU) had already asked in March to put the project on hold.

Labor Minister Hubertus Heil (SPD), on the other hand, insisted on the implementation of the plans for the basic pension and partial abolition of the solidarity surcharge for 90 percent of taxpayers, despite the corona crisis. He told “Focus” about the abolition of solos: “We are relieving the citizens of what is important for stimulating the economy after the crisis. In the end, this also applies to the basic pension. ”The state should be reliable and the improvements decided now should not be reversed.

Mast demanded that elderly care assistants and many cashiers who often earned little would need better wages and a basic pension. “So misusing the corona crisis now to question the basic pension again is shabby.”

The Federal Government has decided to introduce the basic pension on January 1, 2021 and to cancel the solidarity surcharge for 90 percent of taxpayers. The pensions of around 1.3 million people with small earnings are to be improved. Long-term low earners who have at least 33 years of contribution periods for employment, education or care should be able to receive the basic pension. In the starting year, it should cost 1.4 billion euros.

The government passed the basic pension bill in February. For the plans to become law, the Bundestag and Bundesrat still have to agree. In February, doubts arose due to the administrative burden as to whether implementation by the pension insurance scheme could be achieved at the beginning of 2021.

More: Employers are exerting pressure to change the basic pension in parliamentary proceedings. The benefit should only apply to new retirees.


The pension debate is based on a deceptive standard

Pensioners in Berlin

The level of pensions will probably rise in the crisis. This does not give pensioners more money.

(Photo: dpa)

A commission of ten experts was to create what the Union and the SPD failed to achieve in their coalition negotiations: to develop a perspective for retirement in an aging society.

The chances of success were slim. Because not only were those politicians from the coalition who did not agree before. The unions and employers, who often disagree on the pension, also had their say.

The recommendations in the now published final report remain vague, the question of the future retirement age is even outsourced to another commission. For a long time, the experts also advised on the further development of the pension level, without ultimately reaching a consensus.

The SPD and unions in particular have symbolically charged pension levels in recent years and made them the standard for justice. This fixation on a statistical value is a mistake and hinders the reform debates. Because the current pension level of 48 percent is a calculation that hardly anyone outside the specialist understands.

When there is talk of a falling pension level, this often triggers the false fear of pension cuts. Because the lowering of gross pensions is legally excluded.

The level of pensions also says nothing about the level of individual entitlements. It expresses the ratio of standard pension to average income in Germany. A falling level means that pensions are rising more slowly than wages.

The corona sequences show how deceptive this size is. The economist Axel Börsch-Supan expects that annual wages for employees will decrease noticeably – which should lead to an increase in the calculated pension level.

The union demand for a pension level of at least 50 percent could therefore soon be met – even if nobody has more money in their pockets.

More: Minister of Labor Heil wants to start another pension reform this year


Employers want to make final changes to their basic pension

Hubertus Heil

The labor minister prevailed with a concept that drew the circle of beneficiaries further than the Union originally wanted.

(Photo: dpa)

Berlin The resistance of the employers to the basic pension plans of Federal Labor Minister Hubertus Heil (SPD) was great. Now they seem to have resigned themselves to the fact that the law passed by the cabinet in February can no longer be stopped.

In contrast, the Federal Association of German Employers’ Associations (BDA) hopes for further changes to the draft in the parliamentary procedure, which begins on Thursday with a consultation in the Federal Council. The catalog with suggested corrections is available to the Handelsblatt.

The employers adhere to their fundamental concerns: “The planned basic pension is not a suitable contribution against poverty in old age, because the target group of long-term employees is particularly rarely affected by possible poverty in old age anyway.”

However: “If, despite all objections, the legislator still wants to stick to the introduction of the planned basic pension, then he should at least make some substantial corrections to the legal plans,” says the statement.

For example, the basic pension should only apply to future pensioners and not to the pension portfolio. This would “take into account the fact that many pensioners today benefit from other pension regulations that no longer exist with current pension access”. This included the deduction-free pensions from the age of 60 and pension-increasing recognition of training periods.

There is intense argument about details

In their coalition agreement, the Union and the SPD had agreed to improve long-term low-wage earners with low pension entitlements and thus protect them from going to the social welfare office in old age.

The details were the subject of heated argument. In the end, Heil prevailed with a concept that drew the circle of beneficiaries further than the Union originally wanted. Instead of a comprehensive examination of the financial situation of retirees, the aim is to use income to check whether there is a right to a pension increase.

The employers justify the required limitation to new retirees by saying that currently only one percent of all over-65s with at least 35 years of employment are dependent on social assistance in old age. In today’s pension portfolio there is therefore “no special need for social policy action”.

The BDA also requires clarification that the pension insurance must be reimbursed by the federal government for all costs incurred for the basic pension. The previously planned increase in the tax subsidy is not enough because otherwise the pension fund would bear all cost risks. In addition, the federal reimbursement to the pension insurance must also include the high administrative costs resulting from the introduction of the benefit and the income test.

The BDA is particularly critical of the planned procedure to check investment income. Pensioners should report such income to the pension insurance company in a self-assessment. “The administrative costs required would be higher than the services saved by crediting,” says the statement. If no other solution could be found, “it would be better not to count this income altogether”.

More: Hubertus Heil has landed a coup with the basic pension, says Handelsblatt editor Gregor Waschinski.