Pension collapse in Germany. “The dog will soon stock up on sausages”
The pension time bomb does not appear as a loan in the debt statistics, but it will constitute a huge burden on the federal and state budgets for decades.
According to calculations by the Institute for German Economics (IW), the present value of the pension liabilities of the federal government and the Länder is well over EUR 2 trillion (PLN 8.5 trillion). And what's worse, this amount is constantly increasing.
This is not the amount that the state must transfer in one year. This is money that the state must set aside for future pension obligations. For comparison: the federal budget for 2025 is just over EUR 500 billion (PLN 2.1 trillion) – not even a quarter of this estimated value.
In the federal government alone, the present value at the end of 2024 amounted to EUR 903 billion (PLN 3.8 trillion). Tobias Hentze, an economist and one of the leading experts at IW, calculates that if the burdens in the federal states increased to a similar extent, this would amount to approximately EUR 2.3 trillion (PLN 9.7 trillion) for the federal government and the federal states.
The Taxpayers' Association warns that pensions and allowances – i.e. subsidies to medical costs – already cost about EUR 120 billion (PLN 509 billion) every year.
— Officials, officials, officials – this was and, unfortunately, still is the motto! – warns the president of the Taxpayers' Association, Reiner Holznagel, in an interview with “Bild”.
The state employs officials today, but shifts a significant part of the costs to the future.— The mass employment of officials puts a heavy burden on us, taxpayers, and unfortunately a significant part of the bill will fall on future generations, explains Holznagel.
There's something behind it a dangerous and misguided incentive. In the case of state employees, the state pays social security contributions immediately. The clerk initially seems cheaper on the budget. The big bill doesn't come until much later, especially in the case of pensions. By then, the government that employed him is no longer in power. And others have to pay.
The Market Economy Foundation also sees a fundamental flaw in this: politicians benefit from employing officials, but they transfer a significant part of the costs “to the distant future.” — A dog would rather stockpile sausages than a national politician would create a pension reserve, warns Guido Raddatz, an expert on the labor market, education and social security.
Even if there are reserves, they are quickly spent: the national government of Schleswig-Holstein dipped into a fund that was intended for the pensions of many baby boomers and filled budget holes of €300 million (PLN 1.27 billion).
Meanwhile, the burden continues to grow: almost two million officials, judges and soldiers become eligible for future benefits. In the federal administration, 57 percent employees are officials, in the national administration – 51 percent.
Data from the Council of Experts, which advises the federal government, show: pension expenses for officials are increasing in the long term: from 1.55 percent (2010) of total German GDP to 2.2 percent. in 2080
The debate is also becoming heated because retirees are better protected in old age than many pensioners. Officials usually receive 71.75 percent. their final wages in the form of a pension. Their average pension is currently EUR 3,416 gross per month (almost PLN 14.5 thousand). However, the standard pension after 45 years of full-time work is only 1,836 euro gross (PLN 7,800).
“There is no pension reform without pension reform!”
The difference is also visible in the case of poverty risk. According to IW calculations, in 2023 it was 3.3%. among retirees, and among people receiving pensions from statutory pension insurance – 17.8 percent.
The trade union of dbb officials considers these comparisons to be incorrect. Federal President Volker Geyer talks about “comparing apples with pears” in an interview with Bild. However, he also believes that responsibility lies with politicians. — The problem is the insufficient reserves created by politicians – he points out. Digging into pension reserves to fill budget gaps is “absolutely irresponsible.”
One thing is certain: pensions must be paid. However, it is not known what will be missing for this purpose – in education, security, investments or taxpayers. — No pension reform without reform of the pension system! – Holznagel postulates.
