Pay more, get less

Federal Labor Minister Hubertus Heil intends to finance the planned basic pension not from tax revenues, but from social security contributions with the so-called “Respendet”. Can such a thing be fair?

Pension from social security contributions?  Federal Labor Minister Hubertus Heil at a press conference in Berlin.

Dhe “respectful”, with which Federal Labor Minister Hubertus Heil (SPD) wants to increase the retirement income of low-wage earners, leads to considerable new injustices. This is shown by a study by Prognos on behalf of the employer-financed Initiative New Social Market Economy (INSM). According to Heil’s previously known plans, around 2.8 million pensioners could benefit from the respected pension. According to Prognos’ model calculations, however, many others would be completely excluded, even though they had paid more pension contributions. This would devalue their lifetime achievement compared to the “respect recipients”. In the coalition agreement, the CDU, CSU and SPD have agreed to top up the income of those who have worked all their lives with a “basic pension”. Your pension should be higher than the basic security in old age that everyone is entitled to. The coalition partners have not yet negotiated the details.

Heil’s draft law, on the other hand, is about to be published. There is an imbalance in his model from the fact that only those who are supposed to receive respected pensioners who can prove 35 years of contribution periods, i.e. who have worked full or part time, raised children or cared for relatives. A “sliding zone” is being considered so that those who have worked a little less could also benefit. However, it would remain a “trailing edge” that would leave many empty-handed. Those long-term low-wage earners who have earned less than 80 percent of the average income on average and thus only have up to 0.8 pension earnings points are to be benefited. Heil wants to double their average earnings point values. The increase is capped: a maximum of 0.4 earnings points – a total of 14 earnings points – are added for each 35 contribution years. With a current pension value of a good 32 euros, this would be around 448 euros.