Punishing the Young: German Pension Reforms a Gift for the Elderly

[unhappycamper]

http://www.spiegel.de/international/germany/grand-coalition-pension-reform-will-create-inequality-a-933310.html



Berlin's incoming government is expected to institute a wave of pension reform that could exacerbate inequality, burden workers and create huge budget headaches. So why are the parties so intent on pushing it through?

Punishing the Young: German Pension Reforms a Gift for the Elderly
By Markus Dettmer, Kristiana Ludwig, Michael Sauga and Cornelia Schmergal
November 13, 2013 – 05:43 PM

~snip~

By reforming the pension system, Germany's expected new "grand coalition" between the conservatives and the center-left SPD is giving thanks to its supporters. During last September's elections, 78 percent of voters aged 60 and over voted for the CDU, the CSU or the SPD. No other age group gave these parties this much support. And now, in return, the coalition is planning a wave of pension giveaways the likes of which Germany has not seen since the 1970s.

The CDU wants to give more money to all retirement-age women who have raised children. The SPD is demanding long-term employees be allowed to retire at the age of 63 without any reductions to their pension payments. And both parties intend to increase benefits for low-income earners, disabled individuals and older employees who are no longer able to work full-time. The coalition is making it clear that it sees itself first and foremost as the grand coalition of senior citizens.

These initiatives are purportedly aimed at preventing old-age poverty, but, conveniently, this money will mostly go to the more well-to-do parts of each party's base. In the case of the conservatives, this means, for example, wives in households where at least one member has a university degree and, in the case of the SPD, skilled industrial workers. If these promises were instituted in their current form, they would amount to an annual expenditure increase of well over €20 billion ($27 billion), which is more than the annual budget of the German Ministry of Education and Research.

This not only contradicts the coalition partners' pledge to plan for Germany's future, it also jeopardizes the political accomplishments of the past. The tough labor-market and pension reforms pushed through under Chancellor Gerhard Schröder (SPD), who ran the country from 1998 to 2005, created millions of jobs and helped create a financial buffer of nearly €30 billion in Germany's old-age pension funds. By contrast, the plans of Germany's new political alliance are designed to distribute the accumulated reserves as quickly as possible among the population -- a spending-spree approach to the country's finances.