In a discussion concerning rising public debt, the CDU’s economic council has called for cuts to civil servant pensions. According to a reform paper reported by “Welt” the “implicit” debts stemming from long-term pension obligations are considered an “explosive fuse for public finances”. The business association proposes avoiding overburdening state budgets by introducing a model where civil servant pensions are funded through capital reserves and by lowering the benefit level by more than ten percent over time.
This council, which is associated with the CDU but not an official part of the party, suggests gradually changing the pension funding system from sole reliance on current state budgets to a capital-funded model. The paper recommends that contributions toward both retirement income and post-retirement benefit costs must start building up immediately for all newly employed civil servants. Furthermore, it calls for building up a capital fund for existing civil servants. While this systemic shift would initially cause a double burden on public finances, it would end the “practice of shifting burdens into the future through civil service employment”.
To finance the accumulation of a sufficient capital stock, the paper argues that an adjustment downward in the pension level is necessary. It notes that the statutory pension insurance has seen its security level drop from over 55 percent since the 1990s to roughly 48 percent currently. In contrast, the average pension level is presently around 66.7 percent of the last gross salary, reaching 71.75 percent after 40 years of service. Therefore, a gradual decrease-projected to be in the double digits-of this level is deemed necessary to limit financial strain and achieve closer alignment with the statutory pension insurance system.
Wolfgang Steiger, the chairman of the business association, told “Welt” that while many civil servants accept pay reductions throughout their lives compared to what would be possible in the private sector, this does not justify the current, significant enhancement of retirement benefits, especially when considering the factor of job security. Thus, moving progressively closer to the pension level of the statutory pension insurance is framed not only as a matter of financial feasibility but also one of fairness.