In the middle of the coalition row over pensions, the Sahra Wagenknecht alliance has presented new pension proposals. The demands: More instead of less money for pensioners, tax relief and the continued possibility of retiring at 63. FOCUS online explains who would benefit from it.

Probably the most important point: the pension at 63 should remain. Free of charge. This means that anyone who has made 45 years of contributions (“particularly those who have been insured for a long time”) should be able to retire without deductions before the official retirement age.

That doesn’t mean that this is already the case at 63 years old. This was only possible for those born before 1953. This limit is now gradually being raised. For everyone born in 1964 or later, the limit is 65 years – also because the official retirement age rises to 67 years.

Wagenknecht’s party says clearly: early retirement at 63 should remain. Anyone who has paid in long enough should be able to retire at this age. And without any deductions.

Anyone born after 1964 would benefit from this. According to the BSW’s plans, this age group could then continue to retire at 63 without any deductions (after 45 years of contributions) or with certain deductions (after 35 years of contributions).

In addition, pensioners in general would benefit from Wagenknecht’s party’s proposals. Because they want to increase payments this year “significantly more” than planned. So far, an increase of 4.57 percent is planned for July 1st, both in the old and new federal states.

According to the BSW paper, this is intended to compensate for the losses in purchasing power of previous years. In the past, however, the federal government has always compensated for inflation by increasing pensions.

Most recently, the party plans to exempt pensions of up to 2,000 euros per month from taxes. Many pensioners would probably benefit from this too. Since a ruling by the Federal Constitutional Court in 2002, pensions have been gradually taxed more heavily.

For example, anyone who retires in 2025 will have to pay tax on 85 percent of their retirement income. This does not mean that every pensioner pays taxes. After deducting the allowance that is slowly disappearing – in this example 15 percent – additional allowances are taken into account, as is the case with employees.

In purely mathematical terms, a pensioner with a monthly pension of 1,500 euros will have to pay tax on 1,479 euros in 2025. Then, 227 euros in taxes would be due for the entire year. With Wagenknecht’s proposal, no taxes were incurred. Since the average pension is around 1,550 euros, millions of pensioners would have more money in their pockets.

The problem is that all measures would put an enormous strain on the already strained federal budget. This is precisely why things are currently simmering between the coalition partners FDP, SPD and the Greens. A decision on the recently negotiated pension package II was postponed at the urging of Finance Minister Christian Lindner (FDP). The law was actually intended to guarantee a pension level of over 48 percent by 2029, the so-called holding line.

But now the liberals want to discuss things again. The pension remains too expensive with the package, and holding on to the pension at 63 is depriving the labor market of valuable resources. The SPD is strictly against making the retirement age more flexible. Chancellor Olaf Scholz (SPD) himself also confirmed that they did not want to save on pensioners because of the budget.

Wagenknecht’s party is now taking its demands one step further. The party argues as follows: “Measured by economic strength, pension spending is not increasing, but falling.” The federal subsidy for pensions amounted to 3.3 percent of the gross domestic product (GDP) in 2009 and only 2.8 percent in 2022. During the same period, pension fund spending fell from 10.1 to 9.3 percent of GDP.

But it is also a fact that federal subsidies now account for almost a third of all federal expenditure, depending on the budget year. Economists such as Bernd Raffelhüschen have been warning for some time against allowing the budget’s social spending – which also includes pension subsidies – to continue to escalate. Already, says Raffelhüschen, the younger generations are the big losers of the welfare state.

The extent to which Wagenknecht’s plans can be financed remains an open question. In the paper, the party once again advocates for a restructuring of the system. Austria should be a role model. Pensions there are more generous, and unlike in Germany, civil servants and self-employed people also pay into the coffers.

However, at 22.8 percent, the contribution rate is over four percentage points higher than in Germany. As with the other points, the beneficiaries of such a change would be existing pensioners. Those paying in, in turn, would have to deduct more of their salary for statutory pension provision.

However, Wagenknecht assumes that many citizens are likely to accept this in exchange for higher pensions. That is why the BSW is also calling for a referendum on the course of pension policy. At the same time as the 2025 federal election.