The Crisis that Germany is going through pensions An unprecedented measure has resulted. The Chancellor, Friedrich Merzhe surprised everyone with him Germans from Emenzar save As soon as possible to guarantee their retirement, as well as their proposal to help them do so. “Start today”he told them.
This recommendation is not accidental. Germany, like the rest of Europe, faces a demographic pressure which puts in check the sustainability of the public pension system. Projections indicate that, At the end of 2025, almost 20 million of ‘boomers’while Less than 13 million workers will join the labor market.
Disparity of proposals
At the moment, pensions already absorb a quarter of federal budgets And the reform, although inevitable, continues to postpone. Within the coalition that Merz shares with the social democrats of the SPD, the proposals are disparate.
The Minister of Labor, Bärbel Bas, defend ensure the level of pensions in 48% of the salarywhile the Minister of Economy, Khaterine richbet on delay retirement age. “You can’t go well in the long term that we only work two thirds of our adult life and spend a third in retirement: we have to work more and more time,”.
Merzhowever, is inclined to Savings formulas private and has presented its own plan: the “Ten euros a month”. From 2026, Children between 6 and 18 would receive a monthly contribution from the State destined for one investment account that would accumulate up to 1,440 euros in twelve years.
The interests generated would be Tax free to retirement agecurrently set in 67 years. The initiative, with a estimated cost of 1,500 million euros per yearseeks to foster financial education and create one savings base that is capitalized for more than six decades. Merz defends that this plan “would cost less than federal subsidies increasingly high to pension insurance” and allow each German “to establish their own capital.”
“We want the next generation to become familiar with capital markets from the beginning. The new plan, over time, too It will help mitigate the deficit of the state pension system“,, Secretary General of the Merz CDU Party and the Chancellor’s trusted man.
The influential German union Ig Metall strongly criticized Merz’s positiondescribing it as “away from reality and potentially dangerous.” Instead of promoting private pension systems based on stock investments, the union considers that It should reinforce the public pension system, which currently crosses a complicated stage.
Where does this idea arise?
The idea of offering 10 euros per month as an incentive was proposed by Ulrike MalmendierFinance expert at the University of Californa in Berkeley and member of the Council of Economic Experts. “If you invest in a widely diversified portfolio and adopt a 30 -year perspective, then you will have a decent profitability practically guaranteed “also point to Financial Times.
Although this principle has been supported by numerous academic studies, Malmendier points out that “Many people in Germany simply have not fully understood”. “As a finance professor, I can explain it theoretically, but It is better for people to experience it itself“He adds.
The Bundesbank estimates that German households accumulate a total of 9 billion euros in financial assetsof which the 37% remain in cash or in bank accounts with low yields.
