"Time for Tough Calls" - Economist Grimm Advocates Linking Pensions to Inflation
Inflation-adjusted pension increases to foster economic expansion
Veronica Grimm, an economist, has lashed out at the federal government for avoiding long-term pension system solutions. In her opinion, the ongoing discussions about superficial fixes are merely repetitive. Grimm aired her concerns on the Deutschlandfunk, calling out the new government for evading meaningful action.
In the coalition agreement, the Union and SPD agreed to establish a pension commission to propose reforms. However, Grimm feels this isn't enough. She advocates for a more substantial change — revising the retirement age to match the increasing life expectancy. This adjustment doesn't need to be drastic; she suggests increasing it by about a year every decade. By doing so, the ratio of pensioners to those still employed would become more balanced. Currently, the statutory retirement age stands at 67 years.
Grimm also proposes abolishing the pension for those who can work until the standard retirement age due to health reasons, at 63 years. Moreover, she suggests raising pensions based on the price level, rather than wages, to maintain their value in the face of inflation[1]. "These might be inconvenient measures," said Grimm, "but they secure our sustainable future."
Grimm also dismisses Federal Minister of Labor and Social Affairs Barbara Bas' proposal to close the pension gap by including civil servants in the statutory pension insurance as a shallow solution. As she points out, payments always come with expenses. For her plan to work, civil servant claims would need to be reduced.
Instead, Grimm proposes discussing which professions should retain their status as civil servants. She suggests excluding those closely tied to loyalty to the state, such as police officers and justice employees[2].
Sources: ntv.de, chl/dpa
- Pension Policy
- Inflation
- Demographic Changes
[1] Adjusting pensions to inflation aids retirees in maintaining the purchasing power of their retirement income, while increasing the retirement age can help balance the pension system's financial burden by spreading contributions over a more extended period.
[2] Excluding professions with a strong connection to state loyalty from civil service status could reduce the financial burden on the pension system and encourage greater efficiency within the civil service.
- Veronica Grimm, an economist, has proposed revising the retirement age and linking pensions to inflation as part of a comprehensive pension policy, aiming to secure a sustainable future and balance the financial burden.
- In line with her pension policy proposals, Grimm advocates excluding certain professions from civil service status to reduce the financial burden on the pension system, suggesting that professions closely tied to loyalty to the state, such as police officers and justice employees, should be considered for this change.
