PressSplit
After the departure of the Green Youth and the resignation of the Green Executive Board, the traffic light coalition is facing another challenge: Pension Package II is in danger of failing.
Berlin – The political landscape in Berlin is in turmoil. The Traffic Light Coalitionwhich is already struggling with the resignation of the entire Green board and the departure of the Green Youth from the party, is now also confronted with resistance to its central government projects. Nothing seems to be certain anymore. Just two weeks ago the coalition was out SPDGreens and FDP promised to implement pension package II. Now, however, there is renewed opposition from the FDP parliamentary group.
FDP does not want to agree to pension package II: contributions to the pension fund will increase
The FDP parliamentary group rejects Pension Package II in its current form and demands that pension contributions not be allowed to be increased any further. Johannes Vogel, the parliamentary managing director of the FDP parliamentary group, told the Bild-Newspaper: “So the pension package is not yet ready for approval in Parliament”. He also leaned towards the Time expressed his approval and said: “With a view to the development of the economy, job cuts and competitiveness, it is obvious that the Labor Minister’s proposals no longer fit the times.”
One aspect of the pension package would lead to “contributions for the working middle class continuing to rise. But the working middle needs more money in their pockets, not less.” Vogel emphasized that “real changes are needed” in the parliamentary deliberations that began this week. He referred to countries like Sweden, where the pension level is increasing for everyone, not the contributions: “There the pension level is increasing for everyone, not the contributions. We have to take this path more courageously here too.”
Pension package in the Bundestag: Criticism of the pension reform is growing
The Bundestag plans to discuss pension package II in the first reading on Friday (September 27th). The law was originally passed in the Federal Cabinet in May, and since then the traffic light coalition has been trying to get it approved in the Bundestag. The FDP in particular rejects the project, which was also negotiated by Federal Finance Minister Christian Lindner (FDP).
Traffic light at the end? Federal Chancellor Olaf Scholz (SPD), Economics Minister Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP). © Kay Nietfeld/picture alliance
Pension package II has met with considerable criticism. The focus of the project is the Extension of the pension level of 48 percent. This so-called holding line is currently only valid until next year. According to the draft law, it should apply until the pension adjustment in July 2039 – this would have an impact on pension payments until June 2040. Without this measure, according to the government, the level would fall to 44.9 percent. This means that pensions would continue to fall compared to the population’s wages.
Stabilizing pension levels is one of the SPD’s main concerns Olaf Scholz. But critics warn that this will come at a high cost. The number of pensioners will increase significantly in the coming years due to the baby boomer generation. In order to finance their pensions, the traffic light coalition is planning to introduce generation capital, a fund invested in stocks, the returns from which will flow into the pension fund from the mid-2030s.
Higher pensions for baby boomers should be financed from contributions
Another financing approach for pension package II is the one vehemently rejected by the FDP Increase in contributions for employees and employers. The contribution rate has been 18.6 percent of gross wages since 2018. The extension of the holding line “will, taking into account all measures from 2028, lead to a greater but justifiable increase in the contribution rate than under the current legal status,” according to the draft law. Accordingly, the contribution will be 20.0 percent in 2028, 20.6 percent in 2030 and 22.3 percent from 2035. Without the planned changes, the government expects 21.3 percent by 2045.
We have calculated here how this can affect an individual’s net wage:
Companies have to pay the same amount because they have to cover half of the pension contributions for their employees.
Cuts in pensions: Traffic light reduces grants by billions
The pension insurance itself is also critical of Pension Package II. She warns of the additional costs this entails. This is not only due to this project, but also to other government measures: Since 2022, the traffic light coalition has repeatedly reduced subsidies to the pension fund. Together with Pension Package II, the pension insurance company has calculated that ten billion euros less will flow into the pension fund by 2027 than planned.
“Therefore, the contribution rate will increase more than without the cuts. As a result, contributors have to shoulder the additional funding cuts,” warns the German pension insurance in its “pension update” from September 2024. The traffic light coalition is thereby “risking trust in the reliability of its promises.”
