Germany’s pension system requires urgent and profound reform, according to Stephan Leithner, who warned that the state is spending increasing amounts of money just to keep it functioning.
“This situation cannot continue. We cannot sit idly by while more and more federal budget funds are needed to cover the gaps in the pension system,” Leithner told DPA, as reported by KosovaPress.
He explained that pensions in Germany are based on three main sources: state pensions, employment-based pensions (from companies), and private savings by individuals.
Leithner emphasized that people must save more themselves through personal investments or savings plans.
The Deutsche Börse CEO highlighted that the German government has already taken important steps, including plans for a state-supported investment account and an early-start pension scheme, under which children would receive monthly contributions from the state.
He also proposed a larger initial contribution at birth for each child, suggesting a one-time payment of €4,000 (~$4,591) to benefit from compound interest over time.
Additionally, he recommended that every employment contract automatically include an employer-sponsored pension scheme.
Leithner expressed confidence that a government-appointed pension commission will work on these measures to produce positive results by mid-year.
German Chancellor Friedrich Merz has stated that the government aims to rebalance the three pillars of the pension system this year and better regulate the system.
