Grimm Demands Radical Reforms: Pension System 'Easy' Under Schröder
A leading member of the German Council of Economic Experts, economist Veronika Grimm, has vehemently criticized the current pension policy pursued by the acting German coalition government. In a public interview, the economist warned that the policies championed by the Black-Red coalition foster social injustice and are actively “maneuvering the country toward the abyss.” Grimm particularly targeted the measures recently passed by the Bundestag, which stipulate the freezing of pension levels until 2031 and the expansion of the "Mothers' Pension" (Mütterrente). She deemed the approved pension package a “fatal signal” because it drastically raises mandatory contributions to the pension insurance scheme, consequently increasing the cost of labor. This, she argues, will negatively impact Germany’s competitiveness and overall growth prospects. Grimm also voiced concerns about an increasing exodus of companies and skilled young professionals moving abroad, stating that this trend will primarily harm ordinary earners in Germany, as reported by NT24, citing tagesschau.
Grimm asserted that by pursuing this policy, the federal government is acting at the expense of younger generations and low-income earners. Currently, 33 percent of the federal budget is already allocated as a subsidy to the statutory pension insurance system; this subsidy would have increased even without the new package, but is now set to rise even more sharply. This development severely restricts the state's fiscal room for maneuver. The economist therefore sees an urgent need for reform and advocates for drastic cuts. She remarked that such profound reforms are proving more difficult for the current coalition to implement than for previous governments: “Compared to today, Chancellor Gerhard Schröder had it easy during the time of Agenda 2010,” she concluded.
The strong criticism of the pension policy has sparked discussions within political circles regarding alternative reform approaches. CDU Bundestag Member Nicklas Kappe, who belongs to the Young Group of the Union parliamentary faction, suggested in Welt considering a differentiated approach to the retirement age. He called for an assessment of which occupational groups, and for what specific reasons, could work longer than others. Another option under discussion is linking retirement eligibility to the number of contribution years paid, rather than the person's age. Federal Labor Minister Bärbel Bas showed openness to this proposal in the Bericht aus Berlin. SPD Secretary-General Tim Klüssendorf and CSU Chairman Markus Söder similarly signaled their approval. However, the Confederation of German Employers' Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände) firmly rejects this move. The Bundestag approved the controversial pension package last week. Critics warn that this package will lead to even higher costs, which will be borne by the younger generation. As the next step, Labor Minister Bas plans to establish a Pension Commission. This body is tasked with developing concrete proposals for further reforms by mid-2026. The commission is set to include politicians, academics, and, notably, representatives of the younger generation.
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