The shortage of skilled workers and labor is a major challenge for the German economy. Due to demographic change, the labor market will lose seven million workers by 2035, according to calculations by the IAB research institute of the Federal Employment Agency.
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The federal government wants to counteract this by leveraging the potential at home. One of the things it is doing is targeting people of retirement age, who it hopes will continue to work with new measures. But now the pension insurance and the social association VdK are sounding the alarm and warning of rising social contributions.
This is what it is about: The traffic light growth package includes two new incentive models.
- In the first model, employees who continue to work despite reaching retirement age will receive more net from gross. In addition to the monthly pension and salary, they will receive the employer’s contributions to unemployment insurance and pension insurance. That would be 10.6 percent of gross salary.
- In the second model, older employees will receive a “pension deferral bonus”. In return, they will have to forego monthly pension payments despite continuing to work. As soon as they actually retire, they will receive the pension they have saved in one payment and the health insurance contribution saved by the pension insurance company. This bonus will be tax-free.
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The details are still unclear, but the pension insurance company has already calculated how much revenue it will likely lose as a result of the introduction of the first model. “If the employer contribution were paid directly to the employed pensioners, the pension insurance company would incur a reduction in revenue,” a spokeswoman told RedaktionsNetzwerk Deutschland (RND). “Based on the data from 2022, this is around one billion euros per year.” This would have consequences, as the spokeswoman describes. The pension insurance company’s reserve would be reduced more quickly and the contribution rate would be increased earlier and possibly more than previously planned, it continued.
Social Association: A further burden for people with low wages
VdK head Verena Bentele is concerned about this. “This is an additional burden, especially for people on low wages,” she told the RND. And other plans by the traffic light coalition also place a burden on contributors, such as the second pension package to secure the level of pensions.
The pension contribution is currently 18.6 percent, paid half by the employer and half by the employee. It is difficult to quantify the extent to which it will ultimately increase, as the laws have not yet been passed. However, according to government calculations, the second pension package alone will mean that contributions will be 20 percent from 2028. Although the federal government wants to strengthen the statutory pension with a capital stock, the effect is unlikely to be very great. It is also possible that the federal government will fill the gaps over the years with subsidies from the federal budget, but these are also financed by the taxpayer.
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From the point of view of Verena Bentele from the VdK, the government is using the wrong tools in its economic package to address the shortage of skilled workers. There are no measures for people “who are already unable to work until retirement age,” she says, and mentions, among other things, “age-appropriate jobs, flexible working hours, company health promotion, faster access to rehabilitation and many more offers for retraining, further training and qualifications.” This is the only way to keep people like cashiers, roofers or nurses in the job market.
In fact, according to the pension insurance company, around 244,000 people took early retirement with deductions last year. They accepted pension cuts in order to be able to leave the labor market.
