"Tough Love" for the Pension System: Economist Veronika Grimmit's Radical Plan
Inflation-tied pension expansion planned for economic boom
Economist Veronika Grimm has blasted the new federal government for shying away from addressing the pension system's long-term issues. In an interview with Deutschlandfunk, she expressed frustration over constant debates surrounding quick fixes and the lack of substantial solutions in the coalition agreement.
Aging Population, Aging Pensions
Grimm argues that Germany must confront the reality of its rapidly aging population if it hopes to maintain a financially sound pension system. She insists on adjusting the retirement age to match the country's increased life expectancy, which wouldn't happen abruptly but gradually, approximately a year every ten years. This change would bring a better balance between retirees and the employed. Currently, the legal retirement age stands at 67.
Grimm also advocates for ending pensions for those capable of working up to the normal retirement age due to health reasons at 63. Moreover, she suggests tying existing pensions to price levels, rather than wages, to ensure long-term stability. Grimm acknowledges that such measures may be uncomfortable, but she believes they are necessary to safeguard the system's sustainability.
The "Pure Envy Debate"
Federal Minister of Labor and Social Affairs Barbara Bas has recently initiated a discussion about improving income through a scheme that would integrate civil servants in the statutory pension insurance. Grimm, however, considers this a short-term solution. According to her, such a plan would produce both payments and expenses. To make it work, the claims for civil servants must be reduced.
Time to Choose: Professions and Benefits
Rather than including civil servants in the statutory pension insurance, Grimm proposes debating which professional groups should still be classified as civil servants. She suggests excluding professions closely linked to loyalty to the state, such as police officers and justice employees.
The Nitty-Gritty:
- Raising the Retirement Age: To accommodate the increase in life expectancy, Grimm suggests adjusting the retirement age gradually to maintain financial stability for the pension system.
- Eliminating Special Pensions: Grimm criticizes the current coalition's plan to expand early retirement benefits like the "Rente ab 63" and the "Mütterrente." She suggests cutting back on these benefits to reduce the strain on the pension system.
- Linking Pensions to Inflation: While the article does not provide specific details about Grimm's mechanism for adjusting pensions based on inflation, the general direction of her proposals implies a need to revise pension linkage and financing to promote long-term sustainability.
Sources: ntv.de, chl/dpa
- Economist Veronika Grimm's radical plan for the pension system, as discussed in the Deutschlandfunk interview, includes adjusting employment policy by gradually raising the retirement age to accommodate increased life expectancy and eliminating special pensions, such as early retirement benefits, to ensure the system's financial stability.
- In the realm of community policy, Grimm proposes a reevaluation of which professions should continue as civil servants, suggesting the exclusion of close-knit state loyalty professions like police officers and justice employees to reduce expenditure in the statutory pension insurance and steer discussions towards overall sustainability in both finance and business, with reforms also touching upon political and general-news aspects.
