"We need to tackle problems more openly"
Social security systems require a high level of expenditure. This always has to be generated by the working population, irrespective of whether it is financed by taxes or contributions. The following figures make the situation clear: the state medical insurance system has an annual spending total of 250 billion euros, the state pension system 290 billion. The federal budget amounts to 500 billion euros, with 100 billion of that going in subsidies to the state pension system and 28 billion to the medical insurance system (excluding Corona, it would be only 14.5 billion). These figures show the dimensions and the limited scope for any additional burdens.
In 1950, there were 100 people in employment for every 16 pensioners. In 2019, there were 100 people aged between 20 and 65 for every 36 people (approximately) aged 66 and over. If we don’t “step on the brakes”, we’ll be heading for a constantly rising financial burden which will no longer be sustainable. This affects all social security systems, as higher spending by the state medical insurance and social care systems are unavoidable against the background of an ageing population. We should no longer be thinking about improving benefits funded by medical insurance but should be concentrating instead on a reform of the systems which ensures they remain financially affordable.
Switching the system over from pay-as-you-go, as exists today, to fully-funded will not help, as what we’re talking about is the economic power of the working population. Such a switch would represent an additional burden for today’s working population, who in any case have to shoulder the demographic burdens. Rather, fine tuning is necessary in the sense of improving precise targeting. Rising life expectancy leads to a greater financial burden as regards financing old-age pensions. For this reason, we need to adapt retirement age to life expectancy – in other words, after 2030 go beyond 67 as the retirement age.
Here, we can learn from the Scandinavian countries, where a system of automatic adaptation of the retirement age is becoming more common: under this system, two extra years of life expectancy lead to retirement age being raised by one year. In Germany, we need to tackle these problems more openly. The Scandinavians are ahead of us in this respect.
The author, Prof. Heinz-Dietrich Steinmeyer, is professor emeritus at the Institute of Labour Law, Social Law and Business Law (Department II) at the University of Münster.
This article was first published in the University newspaper wissen|leben, No. 1, 2 February 2022.