Controversy has continued to roll in about the recent proposed pension reforms in Germany.

Much of the criticism within the German press has revolved around a possible increase in contributions to shore up the country’s faltering pension system, a move that many say will disproportionately impact younger generations.

It was a shift signalled last week on German television by Social Affairs Minister, Hubertus Heil, of the Social Democratic Party (SPD). Heil said that he was looking at whether to include civil servants and the self-employed in the statutory pension insurance scheme. This, along with other measures, was set out last week in what is known as ‘Pension Package II’.

Other ideas put forward, which have since been dismissed, included a raising of the statutory retirement age.

Speaking on the German television channel ZDF, Martin Werding, an economist and pensions expert with the German Council of Economic Experts, said that the higher contribution level proposed would benefit only the elderly while taking money directly from the pockets of younger generations.

Werding said: “Part of the intergenerational contract is to make sure that young people are not burdened too much. And the government is not taking this part of the treaty seriously.”

Elsewhere, Werding said to the news service t-online that the Pension Package II, as proposed by the government, was a disappointment and that the current government was turning a blind eye to the problems currently faced.

Werding said: “It pretends that demographic change has disappeared. The situation may be favourable now because the labour market has developed well. But just because the next jump in the contribution rate has slipped into the next legislative period does not mean that nothing more needs to be done now. The traffic light raises expectations that cannot be kept.”

He added: “A stable pension level should not be predetermined, but should result from a forward-looking pension policy. Now, younger workers are bearing the costs because their net incomes will fall due to higher pension contributions. The €10bn that the German government expects to withdraw annually from generational capital are – if I may say so: nothing. This is not enough to compensate for the increase in pension contributions.”

According to the Federal Ministry of Labour and Social Affairs, proceeding without the package would lead to the average pension soon being worth only 48 per cent of the average wage, falling to 45 per cent in the long term.

Also included within the package was a proposal to raise the contribution rate from 18.6 per cent today to 20 per cent in 2028, then to 22.3 per cent from 2035 to 2045.

In setting out this stall, Heil was looking over the border to Austria, where such a scheme has existed since 2005. This has, according to Berliner Zeitung, led to an average pension that is €400 a month higher than in Germany.

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