EUROPE - Germany's opposition CDU party has endorsed a set of principles put forward by a working party under ex-federal president Roman Herzog aimed at stabilising the state pension system and increasing emphasis on private provision.
The party has stopped short, though, of supporting a call by its chairman Jürgen Rüttgers for obligatory top-up pensions.
The proposals follow the publication in August of recommendations by the Rürup commission set up by the government to find a way out of the country’s pensions crisis. Recent reports suggest the pension coffers are running a deficit of more than e9bn. Finance minister Hans Eichel (pictured) has recently withdrawn e2bn in government support as part of the government’s latest round of spending cuts.
Herzog proposes increasing the retirement age from 63 to 67 and including a demographic factor into the annual pension adjustment to offset the threat posed by an ageing population.
Women taking time off work to bring up children would be the principal beneficiaries. Those with children born before 1999 would be credited with three years of contributions instead of the current one year, those with children born after 1999 would receive five years instead of three.
Employees who contribute over a substantial number of years at a low level of contribution would be eligible for a guaranteed pension set at 15% over the basic social security level. The report also recommends simplifying the state-supported private pension, the Riester Rente.
The CDU’s sister party the CSU has criticised the proposals. CSU leader Edmund Stoiber has called for a separate set of measures including a controversial proposal for those without children to pay higher contributions and families with children to receive higher pensions.
The government looks likely to try to push through a series of measures taken largely from Rürup, including delaying pensioners’ first payment for one month and a ‘nil round’ adjustment in 2004. It is also likely to reduce pension reserves from 50% of one month’s payments to 30%, giving it access to an extra e3bn in funds – a step that Herzog strongly opposes.
Any new measures however will need ratification from the CDU/CSU dominated Bundesrat.
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