Rent Expert Warns of Financial Consequences of Inclusive Pension Plan
Axel Börsch-Supan, a renowned pension expert, has expressed skepticism over the proposal by new German Labor Minister Bärbel Bas to include civil servants in the statutory pension insurance (DRV). According to Börsch-Supan, this move would ultimately make the financial situation of the DRV even more challenging in the long run.
The expert attributes this to the fact that civil servants tend to have a longer life expectancy compared to private sector employees, resulting in higher pension costs. The inclusion of civil servants in the DRV would increase expenses, leading to higher contributions in the long term, while the federal government and states would benefit from reduced pension payments.
Börsch-Supan criticized the government’s pension policies, labeling them as “yesterday’s politics that grossly ignore the demographic shift.” He emphasized the need for a more realistic approach, stating, “The 48% pension line is not financially sustainable and in the end, the working life will need to adapt to the life expectancy, which means a gradual increase in the retirement age is necessary. Anything else is mere window dressing.”
While acknowledging the legitimacy of the question of solidarity, Börsch-Supan believes that the proposal to include civil servants in the DRV has little to do with sustainable economics.