Group of European Pensioners from Savings Banks and Financial Institutions

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Index of documents > Euromeetings Magazine > Euromeetings Number 6



THE 'contract between generations' (pensioners are supported by contributions of the active people, who will eventually become pensioners, and so forth) is no longer valid. Nowadays, the birth rate in Germany is one of the lowest in Western Europe. That is, the number of active people is decreasing and, consequently, the number of contributions to insurances decreases as well. This phase of recession that we are living, with the consequent increase in the unemployment rate, is making the situation more difficult: each unemployed person means another lost contribution to insurances. And the statistical life expectancy keeps increasing: today, it is approximately 80 years (average for both sexes), and it is expected to rise to 83-86 years in 2030. According to the most recent statistics, at the end of this decade, two retirees will be supported by three active workers. The reform of the pension system could not, thus, be put off; and the current Minister of Labour, Mr. Walter Rister, who is in charge of social prevision, has done his work; of course, he has yielded to the pressure of lobbies. And given that God has set men free to argue, some people think it is a good reform, and some other –the opposition, of course, has taken the lead– think it is totally awful. We could say that there is no need to go to extremes. As all reforms, it is in no way perfect. And probably, in time, there will be a 'reform of the reform'. Children grow up, adults change, and we have to buy new clothes. In short, what happen to pensions after the reform?

 

¨ 1. Until 2020, the contributions (employee + employer) will be under 20% of gross salary. This is what employers wanted: avoiding putting in danger the competitiveness of German exports because of 'social contributions'.

 

¨ 2. Thus, the amount of pensions had to decrease. And it does: pre-reform pensions (retirees and non-retirees older than 55) cover, when it is a 'model situation' (that is, enough years of contribution and some other conditions) up to 70% of the last net salary. Post-reform pensions will only cover –always speaking of 'model' situations– 64%.

 

¨ 3. A second complementary line is established: a private life insurance (without the employer’s contribution), with a limited state benefit. This private complementary insurance is not obligatory. For instance, a person who has built a house and does not have to pay a rent, or has other insurance sources (some companies have long ago established additional insurances) could think that he/she does not need that complementary insurance. If he/she does not have other insurance sources, then he/she has to choose between the new private insurance, or be contented with 64%. And this is clearly not enough, especially for retirees with low salaries, who then would have to make use of social services. And some of them –especially housewives that never worked out of the house, widows, and similar cases–, would have an even smaller income.

 

¨ 4. In order to avoid these situations, purely anti-social, a complementary private insurance is established. And the State helps the following people with benefits:

• He/she who, from January 1, 2002, uses 1% of his/her income (that of the year before the insurance becomes obligatory) in a private insurance; from 2004, 2%; from 2006, 3%; and from 2008, 4%; then he/she will receive the maximum benefit: 38 Euros during the first phase; 76 Euros during the 2nd phase; 114 Euros during the 3rd phase; and 154 Euros during the 4th phase. When speaking about exclusively housewives-mothers: if one of the spouses has that private insurance, then both partners receive the benefit, even though only one of them would have the actual right to it.

• Moreover, for each child: 46 Euros during the first phase; 92 during the 2nd phase; 138 during the 3rd phase; and 185 during the 4th phase.

• Contributions to private insurances (both from the employee and the State) will be non-taxable.

 

But between 64% of the last net salary (level of the new income) and the total salary with which the retiree supported himself/herself, there is a difference of 36%. And the new private insurance, with benefits, covers approximately only 6%. If he/she wants more, then he/she has to pay more for the insurance; that is, walking a tightrope without a safety net beneath.

 

At the beginning, we could have thought that, keeping the old system, companies would have kept their competitiveness in exports if they had accepted a reduction of 0.2% (and no more than that) in their profits. This reduction could even have been distributed proportionally. They could even have been able to avoid benefits that are paid for everyone. But the entrepreneurial lobby has been stronger and has imposed its neoliberal beliefs: the most important third is to keep a safe economy. And every man for himself! But pensioners do not have a lobby, do they? Yes, they do: politicians, who have to watch for their people. It is written in the Constitution. And Constitutions are sometimes priceless. Reality seldom is. As the poet said: 'Ello, Inés, solo se alaba / no es menester alaballo' (It, Inés, sings its own praises / we do not need to do it as well).

 

 

Eduardo Espert (Bonn)