Economist Martin Werding Criticizes Rent Plans as Costly and Unfair to Future Generations
Martin Werding, an economist, has criticized the rent plans of the black-red government coalition as costly and unfair to future generations. The plans, he said, would lead to new injustices, particularly with the proposed expansion of the mother’s pension. “These are not the reforms that could dampen the expenditure development in a socially acceptable way” Werding told the Süddeutsche Zeitung. “This is the wrong direction – the young will pay a massive price.”
According to Werding, the black-red rent plans would mark the end of the older generation’s contribution to the costs of aging in Germany. “The contribution of the older generation was previously the increase of the retirement age to 67 and the decline of the pension level. Both will now be abolished. From then on, only the young will pay” he said.
Werding, a professor of social policy and public finance at the Ruhr University of Bochum, is one of the economists who advise the German government. He and his colleagues had previously criticized the rent plans of the SPD-Green government coalition as unsustainable.
The black-red government coalition plans to stabilize the current pension level, expand the mother’s pension and allow seniors who continue to work to earn up to €2,000 a month tax-free. The coalition also plans to introduce a youth savings plan, providing €10 a month for children and young people between the ages of six and 18 to save for their old age. These measures are part of the government’s immediate program, with the central points of the reform to be introduced by Labor and Social Minister Bärbel Bas in the near future.
Werding, however, believes that the plans to increase the mother’s pension for parents who had children before 1992 could lead to new injustices. Already, some of these mothers benefit from their child-rearing years, particularly those who worked part-time for a longer period. They would receive a higher pension and with the expansion of the mother’s pension, they could be doubly rewarded. “Not all, but there would be many such cases. They would indeed be better off than younger mothers” Werding said, a point often overlooked in the debate.
Only the plans for youth savings accounts, known as the “Frühstart-Rente” receive a positive assessment from Werding, who sees it as a stimulus to planning for the future.