According to Michael Hüther, Director of the Institute of German Economy (IW), significant changes to the statutory pension insurance system can only occur within the framework of a pay-as-you-go structure. When speaking to the “Rheinische Post”, Hüther identified three controlling variables: the contribution rate, the pension level, and the age of pension eligibility. He stated that these perceived reform proposals are “nothing but expected”.
Hücher advocates raising the retirement age to 70 and simultaneously lowering the overall pension payout level. He argues that increasing the retirement age effectively extends the period of contribution payments, which inherently helps stabilize the pension level without necessitating an increase in contribution rates. Furthermore, he suggests that because the state will support revised private retirement savings, the overall pension level will rise from both sources. According to the employer-focused institute head, this adjustment is fair, especially for younger generations, as it gives them adequate time to adapt while preventing their jobs from losing competitiveness due to a non-rising, or even stable, contribution rate.
Marcel Fratzscher, President of the Institute of Economic Research (DIW), echoed these concerns, confirming the inevitability of a pension age of 70. Speaking to the “Rheinische Post”, Fratzscher agreed that raising the retirement age must happen quickly and that a reduction in the pension level is necessary. This reduction, he explained, is part of the requirement that Baby Boomers also participate in the demographic sustainability factor.
However, Fratzscher issued a strong caveat: any pension reform must end the redistribution of wealth from the poor to the rich. He warned that a reduction in the pension level to 46% for low-income pensioners would be a serious mistake, as it would further exacerbate the existing problem of old-age poverty, given that people with lower incomes and pensions already have a significantly shorter life expectancy.
These discussions follow reports cited by the “Bild” newspaper, which alleged that the Pension Reform Commission intends to raise the retirement age to 70 starting in 2061 and lower the pension level from the current 48% to 46% starting in 2031-a plan some committee members have since disputed.