Axel Börsch-Supan: Pension increases should not be suspended – but reintroduce “catch-up” factor!

Munich, May 12, 2020: Regarding media reports on the suspension of pension increases, Prof. Dr. h.c. Axel Börsch-Supan, Ph.D., Director of the Munich Center for the Economics of Aging at the Max Planck Institute for Social Law and Social Policy and Professor at the Technical University of Munich (TUM), states: 

"The proposal to suspend or reduce this year's pension increase needs to be rejected because it changes existing law at short notice and thus destroys the reliability of pension insurance. The pension increase is a consequence of the positive wages and employment number increases of the past year and thus pensioners are entitled to this increase one year later.

Next year's pensions are also secured by the pension guarantee; however, a pension increase is unlikely. This also is current law and reasonable given that pensioners do not have the opportunity to make up for pension cuts.

However, it was a mistake to suspend the “catch-up” factor as part of the 2018 pension pact, as it serves to restore the balance between contributors and pensioners after an economic crisis. This suspension was an intervention in the applicable law and contrary to our pension system. The “catch-up” factor is a necessary supplement to the pension guarantee".

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