Traffic light wants to reform the system – is that enough?

The statutory pension is one of the topics of the future that employs millions of people in Germany. The traffic light coalition wants to tackle and reform a bit here. But is that enough?

It was one of his most important election promises: Olaf Scholz wants to secure the pension level as SPD Chancellor, at the same time the retirement age should not rise. This project also made it into the coalition agreement.

The traffic light coalition also wants to introduce the share pension proposed by the FDP, albeit only in a scaled-down version. In addition, private pension provision is to be turned inside out.

So there is a lot to do for current and future retirees. t-online explains exactly what the future government is planning, what effects this will have for you – and where there could be problems in the long term.

What is the problem with the statutory pension?

Statutory pension insurance is one of the most pressing issues for the future government. Because: The pension with its pay-as-you-go system, in which the current employees pay the pension for the approximately 21 million beneficiaries, is facing a major financing problem.

Economists have been warning against this for years. Increasing life expectancy and falling birth rates mean that more and more retirees have fewer and fewer contributors. The problem will only get worse when the baby boomer generation retires in a few years’ time. The subsidies for pensions from tax revenues will probably increase even further in the future.

In addition: The discussion is very heated socially. The whole thing is complicated by the fact that politicians often only think and act in the legislative periods for which they are elected. In addition, the current pensioners are an important group of voters for politics, with whom they do not want to mess with.

What plan does the traffic light have for the statutory pension?

Little should change for current retirees – with one important exception. This concerns the so-called catch-up factor, which the future government intends to reintroduce “in good time before the pension adjustments from 2022”.

In order to understand the catching-up factor, you have to know that the pensions should theoretically have been cut in 2021. The reason: The wages of the employees had fallen sharply due to the Corona crisis. And since the amount of the pension is based on the wage level, the pensions should have been reduced as well.

But that is exactly what is excluded by law. Instead, the catch-up factor ensures that the actually necessary cut is made up in the following years – through lower increases in salaries or even zero rounds. You can read more about the catching-up factor here.

The increase in pensions will be somewhat reduced

However, the catch-up factor has been deactivated since 2018, which explains the large pension increase for 2022. If the traffic light coalition is now reintroducing it, the increase is likely to be a little less than recently calculated by the pension insurance.

The pension increase in 2022 will be reduced by around 0.6 percentage points, the news agency Reuters learned from circles of the future coalition. Instead of a plus of 5.2 percent in the west and 5.9 percent in the east, there would be only 4.6 percent and 5.3 percent in the coming year.

On the other hand, everyone who receives a disability pension (EM) can look forward to it. There should be “improvements” for them. What that means in concrete terms, however, remains unclear. Read herewhen you are entitled to the EM pension.

Future retirees in particular should look closely at the traffic light plans. An overview:

Retirement age

Even if it is not explicitly stated in the coalition agreement, the traffic light wants to fix the retirement age at the current level of 67 years in the long term. It literally says that “there will be no increase in the statutory retirement age”. Read here when you can currently retire.

Linking the retirement age to increasing life expectancy, as called for by experts, is thus off the table. But the SPD, Greens and FDP want to make the Flexi-Rente better known. They want to conduct “a social dialogue process” together with the social partners about how people who want to work longer can work.

Pension level

There should also be no changes in the so-called pension level. The coalitionists want to keep that at at least 48 percent, “permanently,” as they say. The pension level is a purely theoretical variable. It shows the relationship between a so-called standard pension and the income of a current average earner.

The standard pension is based on the regular old-age pension and indicates how high the statutory pension of an average earner is after 45 years of contribution. It therefore includes exactly 45 earnings points, also known as pension points.

If the pension level falls, that does not mean that the individually paid pension will fall. It just means that overall pensions are growing more slowly than earnings.

Contribution rate

The contribution rate to the pension insurance should be a maximum of 20 percent – at least during this legislative period. It is currently 18.6 percent.

In a few years, after the legislative period, pension contributions are likely to rise significantly, experts fear. Securing the pension level and the stable retirement age are likely to continue to burden the contributors.


At this point, the coalition agreement remains vague. The future government is counting on one thing above all: hope. This is because the pension level, stable retirement age and contribution rate are to be financed by partially converting the pension insurance into a funded system. This proposal comes from the FDP, who had planned a statutory share pension based on the Swedish model.

Specifically, this means: The pension insurance should invest part of its assets for citizens in the financial markets in a fund, broadly diversified and with only low risk. Initially, ten billion euros from budget funds are to flow into it. In addition, the pension insurance should be allowed to invest part of its reserves on the capital market in a regulated manner. However, experts doubt that this is sufficient to finance the pension in the long term (see below).

But there should be other ways to generate more money for the pension fund. The traffic light wants to include more self-employed in the statutory pension insurance. In addition, the immigration of skilled workers is to be made easier, also for non-academic professions. To this end, the traffic light wants to make the skilled immigration law more practicable and introduce a point system.

Are you interested in retirement provision? In the “Pension question of the week“Every Saturday we answer questions that you, our readers, send us. On this page you will find all pension questions that have already been answered. If you have any further questions about old-age provision and statutory pensions, please send us an email at “[email protected]“.

Is that enough for the pension system to work in the long term?

No, probably not. How the pension is to be secured in the long term has not yet been decided – despite the almost certain collapse of the pay-as-you-go system. Already after the publication of the exploratory paper, Andreas Gunkel, Chairman of the Board of Pension Insurance, said: A capital stock would have to be filled with “very, very substantial sums” if the pension level and contribution rate were to be permanently secured.

Johannes Geyer, economist at the German Institute for Economic Research (DIW), sees it that way too. With regard to the new share pension, he told t-online: “Ten billion euros is nothing more than a symbolic contribution. That will hardly secure the pension.”

Even with a return of 8 percent, that would be just 800 million euros for the pension insurance after one year, if the money is to flow directly into it. “That gives the pension insurance in one day”, so Geyer.

“Not a big hit”

If the money is not spent for decades, it could not help with the current problems. “Such a fund is simply too late,” says Geyer.

Budget grants are therefore likely to increase in the long term. More than 100 billion euros are already flowing into the pension fund from the federal government. Pension insurance contributions could also increase significantly in the next few years.

Expert Geyer sums up: “All in all, there are no major lines in pension policy recognizable,” he says. “When it comes to pensions, that’s not a big hit.”

How does the traffic light intend to turn private pension provision upside down?

The coalition agreement says in a big way: “We will fundamentally reform the previous system of private pension provision.” To this end, the traffic light coalition wants to examine a public fund “with an effective and inexpensive offer with the option of opting out”.

The coalition also wants to examine the extent to which “private investment products with higher returns than Riester” can be legally recognized. These should then also be promoted so that people with lower incomes in particular make use of them. A grandfathering applies to current Riester contracts. Read hereFor whom the Riester pension is still worthwhile.

The traffic light coalition also wants to “strengthen” the company pension, as it writes, “by allowing investment opportunities with higher returns, among other things.”

The majority of your private pension plans – including audit assignments – was already found in the exploratory paper. “Unfortunately, the traffic light coalition remains very vague here,” says DIW economist Geyer. “It is not a huge reform of private pension provision.”

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