Inflation-tied pension adjustments to foster financial growth
Veronica Grimm, an economist, is pushing for long-term solutions to bolster the pension system. The new government, partly, evades solutions, according to Grimm, who spoke on Deutschlandfunk. The coalition agreement sets up a pension commission to propose reforms, but quick fixes dominate the discussion.
Politics "Envy Debate" New Minister Wants to Bridge Pension Gap with Civil Servants"
In Grimm's view, the retirement age needs to be aligned with the increased life expectancy. A gradual change of about one year every ten years, rather than a sudden hike, would balance the ratio of pensioners to employed individuals. The current legal retirement age is 67.
Grimm also advocates abolishing the pension at 63 for those who can work up to the normal retirement age due to health reasons. Current pensions should increase with the price level, not wages. "These are uncomfortable measures, but they ensure our long-term sustainability," Grimm states.
Grimm critiques the debate initiated by Federal Minister of Labor and Social Affairs, Barbara Bas, to improve revenues by including civil servants in the statutory pension insurance, citing it as a quick fix. Any improvements in revenue would necessitate reduced claims from civil servants.
Instead, Grimm proposes reevaluating which professional groups should retain their civil servant status. She suggests excluding professions requiring high loyalty to the state, such as police officers and justice employees.
- Pension Policy
- Inflation
Insights: Economist Veronica Grimm's full proposals for tying pensions to inflation aren't detailed in these results. Generally, such proposals link pension amounts to a measure of inflation, such as the Consumer Price Index (CPI), to preserve pensioners' purchasing power over time. These measures are often a part of broader economic strategies to secure the financial sustainability of pension systems.
"Economist Veronica Grimm advocates connecting pensions to the inflation rate as a long-term strategy for preserving pensioners' purchasing power. This step is seen as a crucial element of her broader economic policy aimed at ensuring the financial sustainability of the pension system."
"In her proposals, Grimm also suggests that the employment policy should be revised to permit those who can work past the legal retirement age, due to health reasons, to do so and receive their pensions in accordance with the inflation rate."
