Pension experts have strongly criticized Finance Minister Lars Klingbeil (SPD) for proposing a reduction in the federal subsidy allocated to the pension insurance system. According to Franz Ruland, who previously led the Association of German Pension Insurers, slashing the subsidy by four billion euros would necessitate raising the contribution rates by 0.2 percentage points. However, Ruland indicated that he believes the pension fund’s existing reserves, which are reported to be over 40 billion euros, would be depleted before increasing the contribution rates.
Adding to the concerns, Munich-based pension expert Axel Börsch-Supan warned that such a cut would place an undue burden on the community of insured citizens. Börsch-Supan, an emeritus director at the Max Planck Institute for Social Law and Social Policy, argued that a subsidy reduction would only be justifiable if the federal government simultaneously scaled back other benefits that are not directly related to the pension scheme. Given recent expansions, such as the updated benefits for mothers, Börsch-Supan stated that this balance is currently incorrect.
Furthermore, experts pointed out that this proposed cut causes the coalition to abandon its original policy goal of reducing the overall contribution levy ratio. Börsch-Supan summarized the critique by stating that “nothing matches up” suggesting there is a fundamental strategic flaw in the plan.