ifo Researcher Potrafke Critical of Germany’s Pension Package
ifo researcher Niklas Potrafke has criticized the pension package recently adopted by the German government. “Freezing the pension level at 48 percent and suspending the sustainability factor completely ignores the realities in Germany. Demographic change demands a different pension policy. The introduction of the sustainability factor 20 years ago marked a cautious start to taking account of demographic trends in the pension system. In Germany, fewer and fewer young people have to look after an increasing number of older people. With the population structure developing in this way, pensions will have to rise much more slowly,” Potrafke said in Munich on Wednesday.
Germany urgently needs to adjust the retirement age in line with life expectancy, Potrafke said. If the population is getting older, people must also retire later. Society and policymakers have been suppressing these facts for years.
Furthermore, the pension package is detrimental to public investment. The package will require additional tax subsidies for the pension funds – money that would then be lacking for investments in roads, education, and national defense. “The government’s decision on the pension package shows how much politicians prefer consumption expenditure to investment spending. All debate about the debt brake would fall by the wayside if the government weren’t pursuing such a disastrous pension policy,” Potrafke added.
75 Years of Economic Research
Did you know that the ifo Institute contributed to the pension debate as early as 1956? The publication series "On the Economic Issues of Dynamic Social Pensions" examined the economic challenges anticipated with the upcoming pension reform. Discover this and other multimedia stories on our anniversary website, featuring people, places, and times that have shaped the 75-year history of our institute.
