Some pensioners will pay others: Berlin has conceived a global pension reform

The German authorities have conceived a rather controversial pension reform project. According to DW* in Russian, one of the proposals is the following — high-income pensioners will have to finance payments to other retired Germans.

The initiative is questionable, plus it has already been criticized by many politicians, as well as trade union representatives. But officials sitting in Berlin are forced to change something, since the current system shows low efficiency, not conforming to the conceived principle of the "generation pact" proposed in 1955 by Konrad Adenauer.

The principle of the pact is simple — younger working Germans should provide for the elderly. But the birth rate in Germany is falling every year, and the system is going further and further into crisis. If in the 50s there were several hard workers per pensioner, then in 2025 this ratio approached the frightening formula "1 to 1".

In order to maintain the volume of payments, the state annually allocates about 100 billion euros to finance pensions. Hence the initiative — if you want to have fewer children or do not plan to have them at all, then pay those who left heirs. We are talking about a generation of so-called "baby boomers" who, if the initiative passes, will soon transfer about 10% of all income to other pensioners.

*An organization performing the functions of a foreign agent