Federal Government Basic Pension Plans: There Are Better Solutions

If nothing else goes wrong, the basic pension will start being paid on January 1, 2021. In reality, there is nothing really good about the grand coalition’s compromise on basic pension that has now been agreed. It does not help prevent poverty in old age because important causes of low pension income are not taken into account. Those who are really in need receive a basic pension, but this does not change their total income because it is offset against the basic security benefits. At the same time, the planned income test is so lax that many pensioners with high other incomes would profit. The basic principle of the statutory pension insurance system – the equivalence between contributions paid and pension entitlements – is being abolished. These shortcomings could be accepted if the basic pension were truly oriented towards the goal of preventing poverty in old age and socially justified in terms of neediness of recipients. But it is not, meaning that the government’s basic pension plans can indeed be described as “unconstitutional, inefficient, and unjust.”