Economic approach proposed by Grimm leads to reduced social security benefits
Economist Veronika Grimm, a member of the Expert Council on the German Economy, has proposed reassessing and potentially reducing benefits in Germany’s social security systems, specifically targeting pension, long-term care, and health insurance schemes.
In a statement delivered to the Funke media group, Grimm highlighted that the government’s decision to fix the pension level at 48% of average earnings (the “stop line”) might be fiscally unsustainable. She suggested this could necessitate benefit cuts or revision of support levels to maintain financial balance. Grimm warned that maintaining benefits without reform risks pushing the system into deficit and diminishing incentives for private retirement savings.
For long-term care, Grimm opposed proposals for comprehensive public coverage, arguing for shared financial responsibility with beneficiaries. She implied a reduction in publicly funded care benefits to assure fiscal viability.
In the realm of health insurance, while specific cuts are less detailed, Grimm included health insurance in the scope of rising social insurance costs that require tightening benefits or cost controls, alongside monitoring rising ancillary labor costs, which increase the cost of employment and social contributions.
Grimm’s position has been met with strong opposition from political parties such as the Social Democrats and Greens, who warn that cuts could increase poverty and social inequality, especially affecting vulnerable groups like women reliant on pensions. They advocate for alternative reforms, such as improving employment and private retirement scheme structures, rather than benefit reductions.
Grimm’s comments highlight the need for reform in the sustainability of social security benefits, emphasising more transparency about affordability limits in social insurance. Her overall position stresses the need for honesty in pension, long-term care, and health insurance systems, citing the pension cap as an example of unsustainable practice.
[1] Source 1 [2] Source 2 [5] Source 5 (References might need to be added based on the original sources provided)
Economic and social policy reforms are necessary to address the fiscally unsustainable decision to fix the pension level at 48% of average earnings. This assessment was made by economist Veronika Grimm, who suggested that benefit cuts or revision of support levels could be required to maintain financial balance.
In her stance, Grimm also highlighted the need for shared financial responsibility in regards to long-term care, potential reductions in publicly funded care benefits, and the inclusion of health insurance in the scope of rising social insurance costs that require tightening benefits or cost controls.
