A few weeks ago, the Grand Coalition of the German governing parties debated fiercely on the future of old-age security through the statutory pension insurance for all workers and employees in Germany who are subject to social insurance contributions. Particularly Federal Minister for Labour and Social Affairs, Hubertus Heil, tried to score points for his party, the SPD (Social Democrats). However, the citizen was deceived here, and the actual facts were suppressed.
Mr Heil talked about wanting to stabilise the pension level at 48% of the average wage up to 2025 or even up to 2040. This is, however, a deceptive pack, since this per centage does not refer to the amount paid out, but to the gross pension. Missing are, on the one hand, the deductions for health and long-term care insurance, which currently account to around 11%. Added to this is the steadily rising share of pension taxation, which already stands at 76% today and is rising by 1% or 2% annually until it will finally reach 100% in 2040.
In plain language, this means that after the deduction of various lump sums, pensions are already taxed at a gross monthly rate of 1,200 euros today. We owe this to the red-green Schröder/Fischer government, which introduced the Retirement Income Act in 2005. At this time, the share of taxation was already 50%. If we add to this the slow but steady rise in prices, which pension adjustments are lagging behind, then we find that creeping inflation is an additional, namely secret, tax.
It is anachronistic that old-age provision is still linked to the factor of work and the demographic change that goes with it, and not to performance, namely the productivity of our economy. Our economic output (gross domestic product GDP) in Germany has almost doubled over the last 25 years in real terms (adjusted for price changes), from around 1.7 trillion euros in 1992 to around 3.3 trillion euros in 2017. So I wonder where this astonishingly large surplus has gone. It has by no means reached the working people or those who worked formerly over many decades (pensioners). The gross domestic product is also commonly called national income. It is probable that this word has no longer anything to do with the reality of today.
Thus in the past decades more and more goods and services have been produced with less and less labour. This trend will continue by means of further automation and digitisation (industry 4.0). Thanks to technological progress, which in turn has been driven by the spirit of research and innovation of working people over generations, people should benefit equally from this progress, both in active working life and in old age. There is clearly a misdistribution. I think the debate should be approached from a completely different angle, based on these thought-provoking ideas. I am sick of hearing all that talk about demographic development and retirement at 70.
To complete my argument, I would like to add: If an employee has ensured him- or herself privately, for example by means of direct insurance, or receives a company pension, a double contribution (employer and employee contributions) of health insurance and long-term care insurance contributions is made when these two forms are paid out. This reduces the amount paid out by about 20%. The contributions are collected in instalments over 120 months. This has been the case since the introduction of the law on the modernisation of the health care system in 2004 under Health Minister Ulla Schmidt (SPD).
By the way, according to the Federal Employment Agency the proportion of mini-jobbing pensioners has almost doubled from 587,046 to 1,074,689 between 2003 and 2017. The over-65s represent the largest proportion of marginally employed persons.
(Translation Current Concerns)
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