DPA/Berlin
German Chancellor Angela Merkel said yesterday that her ruling party has yet to make up its mind over how to fund pensions in a greying society.She was speaking after her labour minister, Ursula von der Leyen, came under fire for her plans to top up state pensions by using funds from the existing retirement system. This followed the release of figures pointing to poverty among the nation’s elderly.“We face a long debate in the Christian Democrat Union on how to solve the pension problems,” Merkel told a meeting of pensioner members of her conservative party.Philipp Missfelder, who heads the youth wing of Merkel’s Christian Democrats warned in a television interview of “massive generation inequality” as a result of von der Leyen’s plans. Missfelder, who has regularly said that today’s youth is being unfairly burdened, was backed by Patrick Doering, general secretary of the pro-business Free Democrats - the junior member of Merkel’s coalition government.In an interview yesterday with German radio, Doering said von der Leyen’s plan to boost state-backed pensions for low-income workers was on the wrong track.Doering warned, “High-income earners might no longer receive the pension promised them, because the amount they will have paid in will have been used to help finance the pension entitlements for low-income earners with broken-work histories.”Germany’s compulsory pension system awards retirement benefits in proportion to lifetime earnings. The pension funds hold almost no investments and use current premium income to pay current pensioners.As German society ages, the overall cost of supporting the elderly will rise.The bleak pension outlook for low-income earners follows the government’s move to cut the base rate of pension payouts from 51% to 43% of the average German wage by 2030.According to figures drawn up by von der Leyen’s department and published in the German media, employees who work full-time for 35 years and earn less than 2,500 euros ($3,143) monthly before tax would after 2030 receive less than today’s basic pension of 688 euros. This would be close to what is the poverty line for elderly people today.“The reduction in the pension level will lead straight to mass poverty for the elderly,” Annelie Buntenbach, a trade unionist, told the daily Passauer Neuen Presse.As a result, von der Leyen has proposed a plan in which those retiring can qualify for up to 850 euros per month provided they have paid into pension coffers for sufficient years and have also set up private retirement accounts.The additional pension payouts would be funded from the existing pension system.But Missfelder said that the problem of an ageing population in Germany had been underestimated for decades. “Now the younger generation has to pay the price for it,” he said.Missfelder echoed a call by other members of the Christian Democrats, suggesting that the problem of supporting low-income earners in retirement could be solved with a tax-financed basic pension.“The fight against poverty among the elderly is a task for the whole community,” said Michael Fuchs, a leading member of Merkel’s parliamentary party. “It has to be financed from taxation and cannot be financed by money from contributors.”