"Hitters wall at maximum capacity"
In the face of demographic changes and the retirement of large birth cohorts, the statutory pension system in Germany is facing significant challenges. Jochen Pimpertz, head of the competence field Public Finances, Social Security, Distribution at the Institute of the German Economy (IW) Cologne, has been at the forefront of analysing these issues.
Pimpertz, who has been working at IW since 2001 and teaches the subject of economic basics of health economics at the University of Cologne, has been a key voice in the discourse surrounding the pension system. He emphasises the central challenge in stabilizing the pension system: demographic change, with people living longer and the baby boomer generation retiring.
According to a study by the IW, the level of security provided by the statutory pension system could fall from around 49% to about 44% of gross income without comprehensive reforms. To address this, Pimpertz and the FDP propose maintaining the current form of old-age provision, but with more flexibility and the buildup of a capital stock. The FDP is the only party that acknowledges the necessity of a further increase in the retirement age in its election program.
However, the current election programs of the major German parties do not specify a clear timeline for changes to the retirement age. The SPD focuses on social security and pension dignity but without a specific date for retirement age changes. The Greens and Left share content-related similarities in their pension reform plans, but all three lack a long-term solution perspective, according to the IW.
The idea of making younger civil servants and self-employed pay into the pension fund temporarily relieves the pension insurance but creates additional entitlements for the future. These future entitlements need to be financed elsewhere, and they do not solve the long-term problems of the pension system.
The next federal government will need to address these issues to ensure the stability of the statutory pension system. The SPD and Greens' commitment to a 48% security level is considered an unrealistic promise by the IW, and could burden subsequent generations. The SPD, Greens, and Left avoid discussing the unpopular topic of a higher retirement age with voters, while the AfD emphasises dignified pensions without committed changes to retirement age timelines.
In the midst of these challenges, Pimpertz's work continues to provide valuable insights into the complexities of the pension system and potential solutions for its future. His research and teaching roles at IW and the University of Cologne have positioned him as a leading expert in the field, contributing significantly to the ongoing debate and potential reforms of Germany's statutory pension system.
