Pension reform 1957

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The pension reform of 1957 was a major change in the statutory pension insurance in Germany . The previous funded procedure was abandoned in favor of the pay-as-you-go system , the pension amount increased noticeably and the dynamic adjustment of the pension amount to the gross wage development was introduced.

After the end of the Second World War , the pension fund's capital base was largely destroyed. As a result, the pension level was low and old-age poverty was widespread. At the same time, the economic miracle led to a sharp rise in wages, which caused the income gap between the working population and the pensioners to widen. This difference between wage earners and pensioners could be reduced significantly with the reform. Pensioners were given the opportunity to participate in the economic upswing and to be able to earn a living in old age without family support.

Historical background

Since the second half of the 19th century, the state has made efforts to support the working population in the event of age-related or illness-related loss of work and thus income, and to protect them against poverty and social decline. With the beginning of the social market economy in the 1950s, this social support from the state became increasingly important.

The first social legislation in Germany was under Otto von Bismarck . In addition to a law on health insurance (1883) and a law on accident insurance (1884), a law on invalidity and old-age insurance was passed under him in 1889. This law came into force in 1891. Before that, workers were left to fend for themselves with their retirement benefits. The best provision for old age was having a lot of children looking after their parents when they could no longer work. In addition, the first self-help efforts of the workers had been taking place since the middle of the 19th century, who set up “relief funds” for old-age provision on their own initiative.

Bismarck's law prevented workers who could no longer work from having to forego an income entirely. The employer and employee both paid a fixed percentage of their wages into the insurance as long as the worker was employed. The retirees were later paid a fixed amount, depending on what had been paid in beforehand. The pension amounts paid out were, however, only intended as "extra income" or basic security and by no means served exclusively to secure a livelihood. The retirees continued to need help from their families or their own savings. In addition, pension insurance did not respond to wage increases or inflation , so retirees could fall into poverty when prices rose.

The Road to Reform 1957

These basic features of the pension system were continued in the Weimar Republic and the time of National Socialism and also applied in the first years of the Federal Republic. However, soon after 1945 the Allies tackled a reform of the German social security system . It was to be modeled on the reforms that had already been carried out in Great Britain and France after 1945. However, this attempt at reform ended in 1948 with the end of the four-power administration over Germany. In the course of the currency reform of June 20, 1948, the Western occupying powers stipulated that the reorganization of social security was from now on in German hands and that until such a reform the insurance benefits should be paid out in German marks at the same nominal amount as they were previously in Reichsmarks were paid. This Pension Adjustment Act was passed by the German government on December 17, 1948. Although the pension system was adapted to the new currency conditions, there was no reaction to the rising wages and prices after 1948, so that pensions fell short of wages.

In 1950 the average monthly pension of workers was 60.50  DM and thus only a good 10 DM above the statutory minimum pension of 50 DM. This led to increasing dissatisfaction among pensioners, who were becoming increasingly impoverished compared to the working population. In addition, as a result of the war and imprisonment of war, pensioners in many cases were left without living children. The pension, which was originally only intended as a subsidy for family security in old age, was therefore the only source of income for many pensioners to secure their livelihood and was by far not enough to support them. This was exacerbated by the fact that private savings had also been largely wiped out by war, displacement and inflation.

The retirees hardly had any part in the steep economic upswing that took place in Germany. In order to secure the pension level, the state subsidy was massively increased after the war. In several steps (beginning with the Pension Supplement Act 1951) there were repeated increases in pensions, but these did not significantly increase the general pension level.

Above all, the growing dissatisfaction among the population about the conditions of pensioners finally moved the government of the new Federal Republic to act. On October 20, 1953, Federal Chancellor Konrad Adenauer announced a comprehensive social reform in a government statement . Nevertheless, the next measure aimed again only at a selective increase in pensions: the “Pension Additional Amount Act” of October 1954 increased the pensions of the disability insurance by an average of 13% and the pensions of the employee insurance by an average of 14%. The decisive factor for a major reform was the results of a statistical survey on the social situation of pensioners and benefit recipients, which was commissioned by the Federal Ministry of the Interior in August 1954 and published at the turn of the year 1954/55. This called for an expansion of social benefits. With 13.9 million current pension and benefit cases , the average net amount was DM 62.90, which is significantly below the federal welfare guidelines. Many households drawing pension benefits lived on the subsistence level. The average pension level was around 28 to 32% of comparable wages and salaries, which corresponded to the situation in the Weimar Republic . In nominal terms (without taking into account differences in purchasing power) the minimum pensions in the Federal Republic were even lower than those in the GDR until 1957 , and the average pensions were at the same level.

From now on, a large number of plans and drafts for a comprehensive social reform were presented to the federal government. One of these proposals was the so-called "Schreiber Plan". Wilfrid Schreiber was a private lecturer in economics in Bonn and managing director of the Association of Catholic Entrepreneurs . He started from three premises:

  • On the one hand, the need for protection of workers in industrial society in the middle of the 20th century is "different from that in Bismarck's time"
  • Secondly, the social pension no longer appears as a supplement to other sources of old-age security, but must be sufficient to secure a livelihood in old age
  • and in addition, the retirement pension funds can no longer be taken from a saved coverage fund because this is not possible from an economic perspective, but must be taken from the current national product (the so-called Mackenroth thesis )

Here Schreiber proposed a so-called “dynamization” of pensions, that is, an ongoing adjustment of pensions to wage developments, with which social pensioners could automatically participate in the economic upswing.

Schreiber's proposals drew the attention of the federal government and were taken into account in a draft law of May 23, 1956 on the revision of the pension insurance for blue-collar workers. This stated that the pensions should be based on the average gross wages of all insured persons in the mean of the previous three-year period. In addition, every five years a “social security advisory board” should review the overall situation and issue a recommendation according to which a pension adjustment should be made. However, these proposals met with decisive criticism from employers' associations, banks and Federal Finance Minister Fritz Schäffer and Federal Economics Minister Ludwig Erhard . Among other things, they feared that dynamising pensions would boost inflation and inhibit investment activity overall. Nevertheless, the reform has been tackled.

The reform and its measures

The reason why the critics and opponents of the reform were hardly heard when it was being implemented was due to the upcoming federal election in 1957 . Surveys had shown that the reputation of Adenauer and the CDU had fallen in favor of the electorate and that the opposition parties had more than half of the votes. Above all, the unpopular issue of rearmament and the introduction of conscription had made the federal government unpopular among the population. It was Adenauer himself who pushed ahead with the implementation of the reform so that it could be completed before the general election. He made widespread poverty in old age a central election campaign issue. Pension reform became a campaign tool because of its popularity. In the second half of 1956 the government discussed the content of the reform. On January 21, 1957, the laws to reorganize the pension insurance of workers and employees were passed with the votes of the CDU / CSU , SPD and Free People's Party (FVP), while the German party (DP) abstained and the FDP voted unanimously against it. On February 8, the Federal Council approved the reform laws. In fact, these publicly carried out reform efforts caused a change of mood in the population, which now again preferred the majority of the Union parties.

The reform brought a massive increase in pensions by more than 60 percent. Economically, this improvement in the situation of retirees at the time led to the build-up of an inherent debt that would burden future generations. On the other hand, in the political controversy of the 1950s, the responsibility of generations for one another was emphasized under the heading of intergenerational contracts . This term continues to determine the discussion about the security of social pensions today.

The level of the pensions followed the wages at certain intervals, so that the pensioners could continue to participate in the economic growth after the end of their active working life. From 1957 to 1969, wages rose 115.7%, pensions followed, increasing 110.5%. A paradigm shift lay in the fact that old-age pensions were no longer seen as a maintenance allowance, but as a substitute for wages, and should therefore be sufficient to secure the standard of living. It was stipulated that the standard pension should cover 60 percent of the current average gross earnings of all insured persons, so that there was no fear of a decline in the standard of living in old age.

This reform finally brought the CDU / CSU the election victory. It came into effect retrospectively from January 1, 1957. Contrary to the fears of their opponents, the reform did not have any direct negative economic consequences. Although the set target of 60 percent of gross wages was not achieved - the standard pension only ranged between 40 and 50 percent in the following years - this was still a significant increase before the reform, the standard pension in 1956 was still only 34.5 percent. In addition, like no other event, the reform contributed to restoring the citizens' trust in the West German welfare state and to permanently consolidating social peace by promising to put an end to the prospect of poverty in old age.

literature

  • Abelshauser, Werner : German Economic History since 1945 , Munich 2004.
  • Jecht, Horst : Pension reform and economic development. Problems and dangers , Nuremberg 1957.
  • Lilge, Herbert: Germany from 1955-1963. From the Paris Treaties to the end of the Adenauer era , Hanover 1965.
  • Roth, Richard: Pension Policy in the Federal Republic. On the relationship between economic development and the design of a welfare state sub-area 1957-1986 , Marburg 1989.

Individual evidence

  1. ↑ See the 40-volume collection of sources on the history of German social policy from 1867 to 1914 by Wolfgang Ayaß , Florian Tennstedt and a.
  2. ^ Roth, Richard: Pension Policy in the Federal Republic. On the relationship between economic development and the design of a welfare state sub-area 1957-1986, Marburg 1989, pp. 15-18.
  3. ↑ Abelshauser, Werner: German Economic History since 1945, Munich 2004, p. 194.
  4. ↑ Abelshauser, Werner: German Economic History since 1945, Munich 2004, pp. 194f.
  5. ^ Lilge, Herbert: Germany from 1955-1963. From the Paris Treaties to the end of the Adenauer era, Hannover 1965, p. 36.
  6. ↑ Roth: Pension Policy in the Federal Republic, pp. 26–31.
  7. ↑ Roth: Pension Policy in the Federal Republic, p. 36.
  8. ^ Memorandum from Wilfrid Schreiber: On the reform of the statutory pension insurance
  9. ↑ Abelshauser: Deutsche Wirtschaftsgeschichte, p. 195.
  10. ↑ Abelshauser: Deutsche Wirtschaftsgeschichte, pp. 195f.
  11. ↑ Roth: Pension Policy in the Federal Republic, p. 33ff.
  12. ↑ Abelshauser: Deutsche Wirtschaftsgeschichte, p. 197f.
  13. ↑ Roth: Pension Policy in the Federal Republic, pp. 36–39.
  14. ↑ Abelshauser: Deutsche Wirtschaftsgeschichte, p. 198; Jecht, Horst: Pension reform and economic development. Problems and dangers, Nuremberg 1957, p. 28f.
  15. ↑ Lilge: Germany from 1955-1963, p. 37.
  16. ↑ Abelshauser: Deutsche Wirtschaftsgeschichte, pp. 198f.