Pensions: With Heils trick increase pension contributions, instead of falling

U In order to guarantee higher permanent benefits for the elderly, the Federal Minister of Labor, Hubertus Heil, is planning major changes to the pension. The "Pension Pact for Germany", presented by the Berlin Social Democrat, provides for higher short-term pensions for three million children with many mothers and for those who have lost their jobs . Heil promises a reduction in their contribution to low wages.

The Heil pension plans provide for a considerable increase in the burden on contributors and taxpayers. Overall, the ministry calculates by 2025 with additional expenses of about 32 billion euros. The lion's share is represented by the pension of mother II, which represents 3.7 billion euros per year.

The German pension insurance complains that the grand coalition has charged the pension fund of the mother's pension funding, instead of providing appropriate tax funds. The proposed subsidization of pension contributions for low-income workers will also be charged to contributors.

Additional Expenditure Excluding Any Dues Reduction

As a result, the insured will pay much more in the pension fund in the coming years than would be the case without the new regulations. According to the current law, the contribution rate should be lowered by 0.3 point at the beginning of the year and then remain stable at 18.3% by the end of 2022, as shown by the calculations of Ministry of Labour.

As a result, hurry it is the salvation to get your retirement plan off the ground. The bill has already been received by ministers from other departments. After the summer holidays, the cabinet will then decide on social reform and the new regulations will come into force early in the year.

Instead of falling to 18.3%, the contribution rate will rise to 20% by 2024, when Heil will submit his bill to the parliamentary procedure announced in the fall.

The Grand Coalition is determined to follow suit to avoid the burden of pension payments to pensioners in all cases. Because she needs money for the agreed expansion of benefits. And a yo-yo effect, that is, an increase after lowering the contribution rate before, is more resentment to the voter than a fancy drop.

But in any case, even in the short run, Heil's projects produce sufficient additional expenditure to exclude any reduction in contribution. Its "Pension Pact for Germany" consists of four elements, all of which have already been agreed concretely in the coalition agreement between the SPD and the Union.

In total, the measures are expected to grow steadily and cost about 32 billion euros by 2025. The lion 's share is funded by the contributors. And with about eleven billion, the taxpayer is there. The minister has announced a change in the pension formula.

So you have to install a double stop line which should first apply until 2025 : The pension level, that is, the pension compared to the average 45-year-old salary, has stabilized at its current level of 48 percent. Also for the contribution rate, a stop line must be confiscated: it should increase by the middle of the next decade from 18.6% to 20% at most.

100 billion euros of taxpayers' money for the pension

If one of the two stop lines is torn, the federal government will intervene with credits of 39, additional taxes. To this end, a demographic fund will be created, which will save 8 billion euros between 2022 and 2025.

In addition, the federal government will increase its grant by 500 million euros by year from 2022 for four years. The taxpayer already pays about one-third of all pension expenses. According to Heil, the federal grant is currently raising to 93 billion euros. It is steadily increasing in terms of retirement expenses and will exceed the 100 billion mark during this legislature.

The second element of Heil's pension plans is the extension of the maternity pension. Originally, women who gave birth to their children before 1992 were recognized as receiving a pension. For young mothers, however, it has always been three years.

In the last Parliament, the grand coalition introduced the maternity pension, which resulted in a two-year increase for older women. With maternity pension II now provided, women who gave birth to at least three children before 1992 must be credited for another year of study starting next year.

About three million women benefited from this measure, the minister said. At the same time, however, the Social Democrats proposed an alternative rule: all mothers would be recognized for half a school year regardless of the number of children

The perpetrators are abused

The Heils project contemplates the restriction to rich children as agreed in the coalition agreement. "But I leave the decision between the two alternatives to the parliamentary groups," said the minister, noting that in the three parties in power, there are deputies who see a coupling of maternal retirement II to the number of children criticism.

It is clear that maternity pension II is by far the most expensive individual element for the years to come. The ministry calculates 3.7 billion euros for this achievement. It is funded by contributory funds, although the recognition of study periods is actually paid out of the tax credits.

But even with the introduction of the maternity pension, the German pension insurance could not prevent the financing of contributions. The federal government contributes only modestly to the total cost of this achievement, which will rise from 2019 to nearly twelve billion euros per year.

The third element is a renewed improvement for people with reduced earning capacity. Anyone who prematurely retires due to illness has a particularly high risk of having to rely on basic security at an advanced age. Heil called it "an issue of fairness and decency" to better protect these people from poverty.

His project contemplates an extension of the award periods, which will be adjusted in the future to the increase in the legal age of retirement. This increases the rights of about 170,000 people who are receiving a pension. The costs are still modest, initially at 100 million euros, but will increase to one billion by 2025.

Rising levels of pension required

Last point, Heils Rentenpakt includes a relief for the low paid social security contributions. Special conditions already apply for a job between 450 and 850 euros per month. This so-called slippery zone, in which diminished contributions are gradually increasing to the usual 40 percent, Heil wants to extend to 1300 euros.

At the same time, people with low incomes should still be able to get all of their benefits despite lower retirement contributions. According to the minister, about three million employees will benefit from this relief. "Low-income people can not get tax cuts," said Heil

. Although charities and unions have described pension plans as "not in the right direction", the opposition and businesses have been strongly criticized. The president of the Social Union VdK, Verena Bentele, spoke of significant steps, but they did not go far enough. According to the boss of VdK, a permanent increase in the pension rate is urgently needed.

Preventing the success of populist politicians

Johannes Vogel, an expert on FDP pension plans, spoke of a bill that "distributes electoral gifts as if it were not there". no tomorrow. The costly and overwhelming part of the measures does not serve the targeted prevention of poverty in old age, the Liberals complained.

He would also have promises, whose costs have exploded in the future. Employers also complain about these projects: "The good economic situation has led the grand coalition to drive madly to frivolous increases in benefits," said the head of the Confederation of German employers' badociations, Steffen Kampeter.

. Many people have big fears for the future. "I want to prevent political charlatans from capitalizing on these fears." Therefore, the government must provide social security, especially in the pension. Finance Minister Olaf Scholz also sees higher pension spending as a way to prevent the success of populist politicians.