The topic of “pensions” is discussed again and again – and it is pretended that baby boomers have to worry about their retirement provision. There are enough material resources to enable people to age in dignity. At least if wealth is redistributed fairly.

For some time now, the public has been increasingly concerned with the country’s collective aging, which, under the heading of “demographic change,” is causing many people to fear for their future pensions.

The fact that the so-called baby boomers are retiring without enough young people joining the workforce supposedly makes their pensions unaffordable. However, the broad low-wage sector is much more responsible for the growing poverty in old age, without receiving the same attention as the shortage of skilled workers.

Some politicians act as if, in a collectively aging society, pensions can no longer be financed at the current level and the numerous senior citizens can no longer be cared for.

Apart from the fact that the long-term forecasts of population science were rarely correct, for example because immigration rose sharply, demography should not be used as a tool for socio-political demagoguery.

Rather, in a society as wealthy as the Federal Republic of Germany, there are enough material resources to enable all people to age in dignity, at least if the wealth is fairly redistributed or redistributed to those who earned it.

Although income poverty in Germany is becoming increasingly gray, little is being done to improve the financial situation of old people. According to EU criteria, 18.1 percent of pensioners are affected or at risk of poverty: As a single person, they do not even have 1,186 euros per month and as a couple, they do not even have 1,779 euros at their disposal, of which they usually use the rent for their apartment have to pay, which is why their income is barely enough to live on, especially in big cities and metropolitan areas.

Redistribution of wealth

Only a few countries in Europe have lower pension levels than the Federal Republic. The market-liberal zeitgeist, the economic elites and the established parties in our country do not take kindly to senior women – they are mostly women who get by on small pensions and have to apply for additional basic security in old age, which only a third of those entitled to do do.

The parties in the traffic light coalition also had to reopen their “Pension Package II”, which had already been jointly announced by Federal Social Minister Hubertus Heil and Federal Finance Minister Christian Lindner, because their consensus on the necessary measures did not last long.

Rather, the FDP vetoed the “pension at 63” that had already been created by the grand coalition under Angela Merkel for those with particularly long-term insurance, which no longer exists because the retirement age is gradually being pushed back by two years postpones.

Although the traffic light coalition wants to stabilize the pension level at the current 48 percent by 2039 through a “level protection clause” in the pension adjustment formula and does not want to further increase the statutory retirement age, more old-age poverty is programmed.

Prof. Dr. Christoph Butterwegge is a political scientist and poverty researcher who taught political science at the University of Cologne from 1998 to 2016.  His book “The Polarizing Pandemic” was published on May 18, 2022. Germany after Corona” at Beltz Juventa.

After the FDP was able to push through a modified version of its “stock pension” in the coalition negotiations, the traffic light coalition wants to move to a “partially funded” share-based pension system.

In order to circumvent the “debt brake” enshrined in the constitution after the financial crisis, the governing parties are taking their cue from stock market gamblers who buy shares on credit: a state fund managed by the public “Generational Capital Foundation” is to purchase German and foreign shares with federal loans initially amounting to 12 billion euros per year.

With the income that remains after interest payments have been deducted and is intended to flow to the statutory pension insurance, it is hoped that from 2036 onwards it will be possible to relieve the burden on contributors, employees subject to social security contributions and their employers. However, like all investments on the financial markets, these stock transactions are subject to risk.

The term “generational capital”, which Christian Lindner probably chose for advertising reasons, is a nickname for the new stock market pension, with which future contributors are made dependent on returns achieved on the financial market. After the Riester reform, this is further start-up funding from the federal government for the stock exchange and public support for the profits of banks and financial service providers.

Generational capital does not solve the supposed demographic problem of pension provision using the pay-as-you-go system, because the financial markets are by no means immune to it. Generations do not have a savings box into which they can pay for their old age.

Although building up a capital stock will put a burden on younger people, the traffic light coalition acts as if it were about more intergenerational equity. This is a political fighting term that helps to legitimize a “remodeling” or dismantling of the welfare state by intensifying a distribution struggle between capital and Work is reinterpreted as a “generational war”.

The recently widening gap between rich and poor appears to be a growing contrast between young and old due to the reinterpretation of socio-economic to generational conflicts.

As if the material consequences of a redistribution from bottom to top were not bad enough, the mental consequences of “funded” pension provision, i.e. dependent on the financial market, are also worth considering.

What the Liberals welcome as a “strengthening of the equity culture” may lead to younger people, when they hear the word “pension”, thinking more about the returns of listed companies in the future and looking at “stock market before 8” in order to be able to assess the development of their contribution rate. Employees may soon even shy away from actually necessary measures such as increasing capital and profit taxes for corporations because they fear falling dividends.

To date, only a small minority of employees subject to social security contributions have ever purchased shares. Nevertheless, the law wants to make all contributors “beneficiaries” of the financial market without giving them the slightest influence on the type and extent of capital investments.

Since the arms companies have been booming since the Russian invasion of Ukraine and Olaf Scholzen’s “turning point” speech, a large part of the funds are flowing to companies that make huge profits from the production of weapons and war material.