In ten years\u2019 time there will be 42 pensioners for every 100 workers, according to an estimate from the national statistics service.<\/p>\n
The government\u2019s economic advisors have repeatedly warned that this course is unsustainable and will ultimately lead the country \u201cinto the abyss\u201d.<\/p>\n
However, pensioners make up such an important part of the ruling coalition\u2019s voter base that ministers have promised to safeguard the current level of entitlements and even to increase it for retired mothers. <\/p>\n
This delicate political situation has now been shaken up by a radical report from the German Institute of Economic Research in Cologne.<\/p>\n
\u2022 Is your pension at risk of a tax grab?<\/b><\/a><\/p>\n It suggests two ways out of the quandary. First, it argues, better-off retired households could pay a levy on their statutory pension income that would be directly transferred to their poorer peers, with the burden falling overwhelmingly on the richest 20 per cent of over-65s. <\/p>\n That would cut the level of old-age poverty at no cost to the working-age population, the economists say.<\/p>\n However, the economists prefer the concept of a \u201cboomer solidarity tax\u201d, a notion loosely modelled on the income tax surcharge that was introduced in the 1990s to help foot the bill for German reunification.<\/p>\n In one scenario, Germans over the age of 65 would pay a 10 per cent levy on their \u201cretirement income\u201d \u2014 all private and public pensions benefits \u2014 above a tax-free threshold of \u20ac902 a month.<\/p>\n
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