In the recent dispute over the pension reform package, the Young Union argued that stabilizing the pension level at 48% was unfair to the younger generation, as they would have to bear the costs of supporting a bloated generation of dependents. The Young Union's members of parliament claimed this was a matter of intergenerational fairness.
If we truly want to talk about justice, we should examine the pension system from an ethical perspective. Given the CDU's "economy first" agenda, this is not a superfluous exercise. Ultimately, the CDU forces us to ask: "Do people serve the economy – or does the economy serve people?"
Framing the pension debate as a question of intergenerational justice, that is, as the flip side of the generational contract, inevitably leads into murky ethical waters: different age groups are pitted against each other, and the allocation of resources is justified based on the performance and potential of these groups. Given the climate crisis, colonialism, and various historical and ongoing injustices, this line of reasoning can quickly descend into a nihilistic spiral.
But even the existing pay-as-you-go system, in which working people make regular contributions to support pensioners, is not perfect. Women and all those excluded from good, formal working conditions have always been most affected by poverty in old age. In this sense, the current pension system perpetuates many existing systemic injustices, partly because a dignified retirement is understood as something that must be earned.
Rights, however, are not earned. It would be more productive to situate the issue within the broader welfare debate, alongside social assistance, since retirement ultimately concerns how those who can no longer work live in our society and what support we provide them.
The debate about demographic change ignores the people.
The aging population, whether in Germany, China or other advanced economies, threatens traditional economic assumptions of the welfare state, in which a larger working population supports a smaller group of dependents, be it through financial contributions or through the production of goods and services.
But at its core, demographic change is about people. Productivity per capita is not fixed. A shrinking working-age population could even achieve more, but only if the country invests in its workforce instead of relying on cheap supply chains and the continued exploitation of labor that is often gender- and migration-specific.
The cuts to social spending proposed by the CDU directly undermine the opportunities of the working population. Shifting costs onto individuals – for example, by abolishing care level 1 – would directly weaken the structures that enable participation in the workforce. Women facing a gender pay gap of 17,6% Those who face correspondingly lower pensions already shoulder the majority of unpaid care work. They often outlive their partners, leaving them not only with smaller pensions but also with greater care needs and fewer caregivers. This dynamic exacerbates gender inequality throughout the life course, and the proposed legislation undoes decades of work towards greater gender equality.
An innovation-oriented industrial policy needs people and their ability to innovate and adapt. Economists have already expressed concerns that German innovation policies are heading in a direction that "Mid-technology trap" They advised that they still focused on fields like the automotive industry, which, while important and certainly complex, are no longer at the forefront of technological revolution. This not only means a technological lag, but also insufficient investment in skills, education, and social infrastructure as core elements of innovation.
Other proposals and reforms include a mandatory year of voluntary service for older citizens and tax-free income from active retirement to encourage older people to work more—with the aim of compensating for the shrinking working-age population. However, productivity and longevity are by no means synonymous. Age-related illnesses such as dementia and reduced mobility are highly unpredictable, although preventive and equitable access to healthcare throughout life can delay onset or reduce severity. Without a strong, accessible healthcare infrastructure, longer lifespans risk becoming a fiscal burden rather than a benefit.
Purchasing power – the lack of perspective
Lobby groups like the INSM argue that economic growth is the key to securing higher pensions; however, this ignores the reality that the costs of housing, energy, and care have risen significantly faster than wages and standardized pension adjustments. Increases are irrelevant if the essential shopping basket for retirement outpaces them. If we are concerned about how to finance welfare, it is equally important to consider factors that influence purchasing power, sovereignty over the provision of essential goods and services, and their prices.
No pension system can be considered socially successful if pensioners lack secure housing. Germany's homeownership rate of 46,7% In 2022, the second lowest in the OECD, millions are permanently exposed to high rents. 12% Over 40% of the German population spends on housing costs, compared to an EU average of 8,2%. For younger generations, the burden of housing delays wealth accumulation and reduces their future retirement security.
A transition to a fully funded pension system, where pension financing is based on financial investments in the market, typically via pension funds, threatens to exacerbate this dynamic. Pension funds invest heavily in housing companies like Vonovia, whose business models depend on rising rents. Meanwhile, public spending on housing benefits has skyrocketed: from €1,4 billion in 2021 to €4,3 billion in 2023 following the Housing Benefit Plus reform and the introduction of heating subsidies. While households desperately need support, it is questionable whether diverting billions into rental income—without simultaneously expanding affordable housing or accelerating the retrofitting of renewable energy systems for energy sovereignty—is an efficient use of public funds.
By 2030 approximately 29% The German population is over 65 years old. Funded pension schemes offer no solution because they do not adequately consider property ownership and the prices of key expenditures. And, as the housing crisis demonstrates, pension funds often generate profits at the expense of increased living costs. Pay-as-you-go financing can be robust because it requires no savings – in fact, it was introduced when Germans had no savings left after World War II – and is therefore particularly relevant as Germany... since 2018 It is stagnating. However, given demographic changes, it requires investment in people.
Strong social investment, affordable housing, and climate resilience benefit both today's pensioners and younger workers. Instead of hoping we can continue as before, we should view demographic change as an opportunity to re-evaluate fundamental assumptions about savings and to see social security not as an option, but as the right it is.
This post was titled "The blind spots of the pension debate" on 18.12.2025/XNUMX/XNUMX in Macronom first published.