Leading economic advisor Veronika Grimm has voiced sharp criticism of the German government’s proposed pension package, slated for cabinet approval this week. In an interview with the “Rheinische Post” Grimm expressed concern that the government has not fully grasped the seriousness of the situation regarding the long-term viability of Germany’s pension system.
Grimm, a member of the government’s Council of Economic Experts, asserted that the planned reforms fail to deliver substantial improvements in sustainability and may even exacerbate existing challenges. Specifically, she highlighted the expansion of the “mothers’ pension” and the government’s commitment to maintaining the current level of benefits – the so-called “Haltelinie” – as significant drivers of increased expenditure. These measures, she warned, will place a considerable burden on the federal budget and elevate ancillary wage costs.
She characterized these developments as counterproductive, particularly in a time when Germany urgently needs economic growth. Grimm advocated for reforms that would ultimately resemble pension cuts, emphasizing that necessary adjustments have been clearly outlined for some time. These include linking the pension eligibility age to rising life expectancy, tying the increase in existing pensions to inflation rather than wage growth and reintroducing a sustainability factor.
Furthermore, Grimm suggested adjustments aimed at moderating the growth of federal subsidies to the statutory pension insurance, recommending the elimination of the mothers’ pension, the abolition of early retirement at age 63 and modifications to the framework for widows’ pensions.