Pension alert! Economist warns of impending crisis for younger generations

Pension alert! Economist warns of impending crisis for younger generations

On November 7, 2025, Maybrit Illner's talk show discussed an alarming situation in the German pension system. Clemens Fuest, a top economist from the Ifo Institute, warns urgently that the current pension system could soon pose serious problems. He makes a worrying comparison - the pension system resembles a chain letter in which financial resources are becoming increasingly scarce. This is particularly critical given the falling birth rate.

Fuest explains that the situation of the pension fund raises uncomfortable questions: “The young generation is being overburdened, or the older generations have to live with unreasonable demands,” is his view on the future distribution of burdens in society. Friedrich Merz of the CDU supports these views, citing worrying statistics that show government spending has increased by a quarter while investment by German companies is falling. Chancellor Merz warns that the government will have failed if the financial lines cannot be stabilized by 2029. A discussion about the distribution of shortages is essential, demands Fuest, and suggests that state activities need to be reviewed in order to concentrate on the core tasks of pension insurance.

Demographic challenges and proposed solutions

Again Deutschlandfunk reports, we are facing a demographic challenge. Around a quarter of pensioners in Germany receive less than 1,300 euros per month from the statutory pension and many single pensioners are at risk of falling into poverty. The German pension system, which is based on a pay-as-you-go system, is under pressure from a declining number of employed people who have to support a growing pensioner population. The high life expectancy and low birth rate exacerbate the situation.

The pension insurance already receives state subsidies, which cover around 30% of expenses. These subsidies, which amount to around 120 billion euros annually, are to be increased by 4.1 billion euros by 2029 in order to ensure financial stability. Experts also advocate raising the retirement age and present the idea of ​​a dynamic model that could raise the retirement age to 68 by 2042.

Comprehensive reforms are necessary

Johannes Winkel from the CDU and Tim Klüssendorf from the SPD emphasize the need for a common approach to reforms in the social security system. It is said that without cooperation it will be difficult to implement the necessary changes and thus bring pension funds into the future. A dynamic model could help to overcome the challenges, as could the proposal for a solidarity tax of 10% on retirement income to counteract poverty in old age.

In addition, the federal government plans to encourage the self-employed and civil servants to take out pension insurance in order to make the system fairer - ideas that could not only strengthen the income side, but also take the pressure off the shoulders of future generations. The introduction of an early start pension from 2026, in which 10 euros per month will be paid into a retirement savings account for children, also shows a creative approach. These measures could help to strengthen the support of pension insurance.

The discussion about reforming the pension system is more than necessary. Like that too German pension insurance As emphasized in a recent podcast, volunteering also plays a crucial role in pension advice, as committed citizens act as a link between the administration and the insured. Information about volunteer positions in insurance counseling is an important part of providing better support to citizens and strengthening the system.

The situation in Germany requires adapted strategies and a broad discussion about what a fair distribution of resources and burdens in society can look like. This is the only way to make the pension system fit for the future.