Pension crisis under pressure: Finland's guide for Germany!

Pension crisis under pressure: Finland's guide for Germany!

Finland and Germany are increasingly facing similar challenges in their pension systems. Both countries are struggling with high debts, growing social spending and an aging population that are putting pressure on systems. That reports Mercury.

In Finland, the debt ratio has increased from 40% to over 80% of gross domestic product, and new debts of over 13 billion euros are expected in 2025. Economist Matthias Strifler warns that the debt ratio could even exceed 90% in the coming years if appropriate measures are not taken.

Rising social spending

Social spending, particularly on pensions and healthcare, is the fastest growing budget item in Finland. Like Germany, Finland is one of the fastest aging countries in Europe. This is leading to rising costs in the health and social care system, reinforcing the need for urgent reforms.

In Germany, the reserves of the German Pension Insurance (DRV) are shrinking, and it is estimated that these could fall to the minimum reserve of 0.2 monthly expenses in 2027. In autumn 2027, the DRV may temporarily be unable to pay pensions from its own resources. This has far-reaching consequences and could make the federal government more responsible, since pension subsidies already make up the largest budget item.

Need for reform and different strategies

Economists are therefore urgently calling for reforms to the statutory pension system. Proposals include, among other things, linking the retirement age to life expectancy, which has already been practiced in Finland since 2017. Early retirement was made more difficult there in order to better meet the challenges. In contrast, the federal government under Chancellor Friedrich Merz is sticking to the standard retirement age of 67 and is not planning to increase the retirement age.

In addition, plans to stabilize pension levels and expand maternal pensions are putting a strain on the federal budget. Sales of shares from the state pension fund are planned in Finland from 2027 in order to reduce gross debt. However, these measures are controversial.

The issue of pensions is not only an economic challenge, but also affects the quality of life of citizens. The discussion about retirement provision and the handling of pension income shows how different cultures deal with retirement differently. The term “pension” itself has many facets that are discussed in society, from individual experiences to historical contexts, such as the influence of seigneurs on life in ancient societies Dictionary.com.