Unemployment countermeasures initiated by the Commission
In a recent study commissioned by the Friedrich Naumann Foundation and conducted by the ifo Institute under the leadership of Prof. Dr. Marcel Thum, there is an urgent call for reforms to improve the sustainability of Germany's pension system. The study highlights the need for reforms to address the demographic challenges and financial sustainability of the statutory pension scheme.
The recommended measures to improve pension sustainability in Germany include:
- Adjusting the retirement age in line with increasing life expectancy to reduce the pension burden.
- Increasing contribution rates or expanding the contribution base to strengthen pension funds.
- Diversifying pension financing, possibly by incorporating additional income components or private pension schemes to reduce reliance on statutory pensions.
- Enhancing labor market participation, especially among older workers and underrepresented groups, to maintain a stable contribution base.
- Implementing structural reforms to improve system transparency and efficiency.
Given the Friedrich Naumann Foundation's affiliation with Germany's Free Democratic Party, it tends to advocate for market-oriented reforms, such as encouraging private pension provision and less reliance on redistribution, although these aspects are not explicitly listed in the search results.
On August 6, 2025, the federal government launched its pension reform, with Labor Minister Barbara Bas (SPD) presenting the plans. However, economist Veronika Grimm stated that the federal government's plans do not improve the sustainability of the pension system. Grimm also expressed concern that these developments are counterproductive at a time when Germany needs growth.
If meaningful reforms are not implemented, the contribution rate in the statutory pension insurance will rise from 18.6% to 22% by 2050. This rise in contribution rate could have serious consequences for employees and companies. The study suggests various courses of action to achieve relief, including strengthening the sustainability factor, linking retirement age to life expectancy, increasing the employment rate of women, abolishing retirement at 63, promoting qualified immigration, and implementing inflation-oriented adjustment of existing pensions.
The plans for long-term stabilization have been met with significant criticism. Marcel Thum, head of the ifo Institute in Dresden, sees little prospect of success with Barbara Bas's pension plans. According to Grimm, the plans could worsen the sustainability of the pension system and significantly increase expenditures. The study also indicates that the current direction of the mother's pension and the cap line is heading in the wrong direction.
Germany is facing a dramatic demographic challenge, and the need for reforms to secure the long-term viability of its pension system is more urgent than ever. The details of the specific measures from the Friedrich Naumann Foundation's study may require direct access to the full study document for a comprehensive understanding.
- The Friedrich Naumann Foundation, affiliated with Germany's Free Democratic Party, advocates for market-oriented reforms in the pension system, including encouraging private pension provision and less reliance on redistribution, which could help address the financial sustainability in business and politics as part of the general-news discussions.
- Given the concerns expressed by economist Veronika Grimm about the federal government's pension reform plans not improving the sustainability of the pension system, there is an urgent call for implementing meaningful reforms, such as those suggested by the Friedrich Naumann Foundation's study, to avoid serious consequences for employees and companies in the long run.
