Inequality forced by the new pension system

Pension system favors imbalance in wealth distribution

05/05/2014

Growing imbalance through the pension system? In the Committee for Labor and Social Affairs of the German Bundestag have attended the hearing on „Draft of a law on performance improvements in the statutory pension insurance (RV-Leistungsverbesserungsgesetz)“ Numerous experts discussed possible advantages and disadvantages of the planned amendment.

The German pension insurance concludes in its opinion, among other things, that „the modification of today's regulation has significant distributional effects“ Has. The envisaged new regulations would lead to it altogether, „that the contribution rate will be higher in the medium and long term and the pension level lower than it would be if the current law were to continue“, reports the German pension insurance. This could increase the imbalance in society in the future. In particular „the insured who are younger today are more heavily burdened by the higher long-term contribution rate, although they can no longer benefit from a significant part of the planned benefits and are more affected by the reduction in pension levels“, so the criticism of the experts. Future generations of employment would therefore be significantly disadvantaged by the pension system.

Increased risk of poverty for future generations
To a comparable result comes according to message of the news magazine „Mirror online“ also a previously unpublished study by the Berlin Institute for Population and Development. As a result, future generations of paid workers will not only have to pay more into pension funds and work longer hours, but will also have to make do with more modest pensions. In the younger age groups, a significantly higher risk of poverty is to be assumed. The German pension insurance explained to the planned legislative changes that „With the exception of the improvements in the incapacity pensions, the new regulations, especially today's existing pensions and insured persons of near-vat years“ favor. Younger generation would be additionally burdened.

Social mobility in Germany as low as in the US
The inequality in the German society became „Mirror online“ According to the OECD, the president of the German Institute for Economic Research (DIW), Marcel Fratzscher, has already criticized the OECD in 2011, saying that „the differences in Germany have grown up“ are. Social mobility in Germany is now almost as low as in the US. „So, once you get stuck in a particular educational and income environment, you can not get out of it“, Fratzscher continues. Although Germany clearly acknowledges the principle of the social market economy, success remains manageable. That we, despite intensive efforts of a socially just redistribution „having such a great inequality in wealth does not correspond to our self-perception at all“, stressed the DIW president. (Fp)