The German Pension System is based on an intergenerational contract. The working generation pays for the pensions of the retirees. But in the light of demographic change, the pension system is increasingly experiencing challenges. More and more retirees are facing a smaller number of contributors. In the 1960s, the ratio of retirees to contributors war 19:100. Nowadays, the ratio has changed to 34 retirees for 100 contributors. According to economists, the ratio will changed to 50:100 in the year 2030 and even 65:100 in the 2060.
Therefore, pensions have become a symbolic topic: A symbol for the question if the Young and the Old can come to a fair agreement or if society is facing a conflict of generations. In view of demographic change and unemployment, financing requirements are rising sharply. The burden cannot be borne by one generation alone, neither by the younger ones nor by the older ones alone: Both generations must share the burden when the structure of employment and age becomes less favourable.
The FRFG advocates for an intergenerationally-just pension policy called “divisional solution”, a proposal to share the burdens of demographic change equally among the young and the elderly. Today’s pension system in Germany is in urgent need of reform: The system has to secure justice between (intergenerational justice) and within (social justice) the generations themselves.
The FRFG proposes an eight-point plan to renew the generation contract and to reform the statutory pension insurance and the Riester pension in line with the needs of generations:
1. Stabilize pension levels — but also contribution rates!
2. Link retirement age to life expectancy
3. Reform the Riester pension
4. Strengthen minimum security
5. Involve civil servants, self-employed and politicians in the community of solidarity
6. Strengthen disability pension
7. Seriously counter-finance benefits not covered by insurance
8. The young generation has lost confidence in retirement – A generation summit is needed!