The proposal by the German Institute for Economic Research (DIW) to introduce a special levy on individuals receiving higher pensions, to contribute more to the financing of the pension system, has drawn mixed reactions from various political factions and organizations.
The Union faction in the Bundestag has voiced its opposition, arguing that demographic challenges are a societal responsibility that should be addressed through broader funding mechanisms. Stefan Nacke, a member of the Committee on Labour and Social Affairs, emphasized that such levies should also apply to assets, warning that redistribution solely amongst pensioners would be “one-sided” and counterproductive. He pointed to the principle that longer and higher contributions correlate with higher pensions as vital for maintaining trust in the system.
Criticism of the DIW’s approach also emerged from the AfD faction, who expressed concerns about the increasing burden on workers and now pensioners. They suggested the proposal undermines the incentive to work and criticized the state for failing to fulfill its responsibilities, pointing to allegedly unsustainable social spending.
The Left party, however, offered tentative support for the concept, suggesting that it could be preferable to current proposals affecting pensioners. They advocated for a broader approach incorporating other income sources and assets, particularly those of wealthier seniors, to ensure fairness. They stressed the need for a comprehensive pension reform.
The German Social Association welcomed the suggestion, asserting that the “solidarity-based pension system” requires a broad base of support. While cautious about implementation details, they acknowledged the value of considering new approaches that avoid cuts to already-modest pensions or increases in retirement ages.
The President of the Social Association VdK underscored that the DIW study highlights key vulnerabilities in the pension system and that tackling poverty in old age should be a collective effort. She advocated for a fairer contribution from the “super-rich” towards social welfare.
However, the German Trade Union Confederation (DGB) rejected the proposal, arguing that it simply redistributes the burden among pensioners rather than addressing the underlying issues. They criticized the proposal for overlooking high-income earners and large assets and argued for a broader approach taxing high incomes and wealth to relieve pressure on contributors.
One economic advisor noted that Germany’s demographic development creates significant strain on the pension system. While acknowledging the proposal as “discussable” he highlighted the necessity of reducing overall pension expenditure and carefully considering the impact of any such levy on incentives to work and retirement planning.