{"text":[[{"start":7.7,"text":"German Chancellor Friedrich Merz has endorsed a Swedish-style public pension fund that would invest a share of workers’ wages in capital markets as part of sweeping proposals to overhaul the country’s increasingly costly retirement system."}],[{"start":22.95,"text":"Merz, a former chair of US asset manager BlackRock in Germany, on Tuesday said: “The Scandinavians have done it, so will we.”"}],[{"start":30.95,"text":"The idea is part of proposals outlined by a group of experts and MPs given the job by the chancellor of finding ways to contain rising pension spending, which accounted for 41 per cent of all welfare expenditure in 2024, while stabilising current pension levels."}],[{"start":44.25,"text":"Under the proposal, a compulsory individual contribution of 2 per cent of salaries would “be managed centrally and invested in capital markets”."}],[{"start":52.9,"text":"The goal is to help ensure that in the longer term, pension levels “rise significantly again”."}],[{"start":59.05,"text":"The move would be a novelty for risk-averse and cash-loving Germans, who have been more reluctant than European peers to embrace capital markets to invest their large savings. The capital-based system will be designed so that pensions will be guaranteed and increase even in the event of a severe financial crisis equivalent to that of 2007, government officials said."}],[{"start":81.15,"text":"“Part of that money could be invested in infrastructure projects,” Jens Südekum, an economist who advises the government, told the FT. “This is a big chance to overcome the deficits as well as the shortcomings of European capital markets, which lack these big investment funds.”"}],[{"start":99.45,"text":"Merz’s pension reform is part of a planned overhaul of Germany’s postwar welfare state, including health insurance and elderly care. The efforts have proved fraught for the chancellor’s deeply unpopular government, exacerbating tensions between his Christian Democrats and their junior coalition partners, the Social Democrats."}],[{"start":118.9,"text":"Sitting next to SPD labour minister Bärbel Bas on Tuesday, Merz said the recommendations formed an “overall concept that only works in its entirety”, which the coalition had agreed to “fully implement”. Bas said the government was hoping to pass the reform this year."}],[{"start":135.95000000000002,"text":"Across Europe, recently in France and the UK, pension reforms have been politically toxic and forced governments to backtrack. "}],[{"start":143.65,"text":"Germany’s pay-as-you-go system is facing widening deficits, with 16.5mn baby boomers retiring by 2036 and only 12.5mn new workers joining the workforce, according to the Cologne Institute for Economic Research."}],[{"start":159.65,"text":"The government in 2024 paid €118bn to plug holes in the system, or about a quarter of the total federal budget. That share could double to 50 per cent within the next two decades, according to economists."}],[{"start":172.70000000000002,"text":"Other recommendations include linking the statutory retirement age — currently 67 — to the country’s life expectancy and withdrawing early-retirement incentives. For every year gained, people should work eight months longer, the commission proposed."}],[{"start":188.00000000000003,"text":"The experts also suggested raising the age — currently 64 — at which people who have made contributions for 45 years are able to go into retirement with their full pensions. Unions are likely to oppose the measure."}],[{"start":200.40000000000003,"text":"While the German bipartisan commission failed to reach unanimity on all the measures, it has managed to reach broad consensus, which should limit potential frictions and controversies, according to Südekum, an adviser to finance minister Lars Klingbeil, who is also co-leader of the SPD."}],[{"start":217.45000000000005,"text":"Among the commission’s measures is also a recommendation that civil servants and MPs, currently exempt from contributing to the statutory pension system, be brought into the system. "}],[{"start":228.10000000000005,"text":"The experts also call for an overhaul of Germany’s so-called “minijobs” — low-paid, low-tax jobs introduced under SPD Chancellor Gerhard Schröder as part of labour market reforms aimed at reducing mass unemployment. "}],[{"start":243.45000000000005,"text":"While the scheme helped boost employment, critics argue it has trapped many women in part-time work with limited pension entitlements. "}],[{"start":251.40000000000003,"text":"Requiring employers to pay full social security contributions on such jobs would encourage longer working hours and increase women’s participation in the regular labour market, Südekum said."}],[{"start":262.3,"text":"“Given there is this large consensus within the commission, the government will have a hard time delivering a reform package that doesn’t follow the recommendations,” he said."}],[{"start":279.00000000000006,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1782216187_5213.mp3"}