Construction costs are currently skyrocketing

Please try to think a bit outside the usual lines. This is a different category than purchase financing. Let’s say Grandma Erna (80) gets a subsidized loan of 100k with a 10-year term for energy-efficient renovation at 3%. Interest only, no repayment, the loan should be redeemed by the heirs. That makes 250€ per month, most of which should be covered by the lower heating costs. This solution would be socially acceptable, affordable, and would allow savings in the existing building stock. Those who cannot afford the remaining few euros would have to sell and rent from the proceeds. The state cannot finance everyone the luxury of a life without capital consumption.

To clarify what I mean: Those who live off their assets (e.g., a securities account) usually plan a withdrawal with capital consumption. This results in safe withdrawal rates of usually 3-4%, but the exact value is not important here. Inheriting a debt-free owner-occupied property is calculated without capital consumption. That is a luxury that greatly increases the required capital stock. Those who can afford it, fine. But it is not the task of the state to enable heirs to have a debt-free, renovated property.

My grandma Erna (83) has more than enough financial reserves to renovate her ancient property, but she doesn’t want to. In her opinion, she lives in a dream luxury property with running (hot) water, (oil) central heating, a toilet in the house, washing machine and dryer, an electric stove and oven, sealed windows and shutters. There’s no ceramic as good as the puke-green toilet bowl from the 60s anymore, and her windows were so expensive back in the 80s and are of such good quality that basically nothing has to be done to them yet! Besides, she’s going to die soon anyway, so why should she spend any money on it.
But my grandma Erna also grew up with an outhouse at the end of the street, an outhouse in the yard, without electric light, without central heating, and with “one family per room,” from that perspective this is all luxury....

Twenty years ago we wanted to install a new sink in her 60s kitchen once, it’s still unused in the basement today because nothing new is needed there...

Tell your grandma at 80 times that she should sell and move into a nursing home or rent... You'll be disinherited faster than you can say the sentence.

I have to briefly interrupt with retirement: The state has commissioned the German RV to pay social benefits that should actually be borne by the state itself. For this, the RV receives a federal subsidy from taxes.

The subsidy was always smaller than the payments. Clear ergo:

The statutory pension is not subsidized by the state with tax money, but rather tapped and partly redirected by the state.

Now about the generational contract: The idea is to partly redistribute the productivity of the national economy to the elderly of that very economy. As long as productivity grows faster than demographics hit, there is mathematically no problem. Mathematically! Because in reality, at the time of the system's installation, wage increases followed productivity increases. This made wages as the key to pensions sufficient. This was gradually shredded, and THAT IS WHY there are now problems with demographics.

Private, funded provision: I would like to point out that the pension of a given year is ALWAYS taken from the yield of that year, no matter whether it is a state or private pension. The capital is not kept in reserve until needed, but its yields pay pensions to those who receive them precisely then. It is only a redistribution system based on property rights instead of under state sovereignty. Is that exactly why it is better? Because you can sell your “pension rights”? Pension must always be taken from current yields, otherwise from what? This quite simple truth dissolves many patterns of thought when fully examined.

As an old building owner, I would already be glad to get craftsmen. I have been looking for craftsmen since September to carry out our renovation. Now it is January and I am not a bit further. Oh yes, the structural engineer is coming next week. That's it. So far, I have not managed to get a single cost estimate. One on-site appointment has taken place. But otherwise? It is hair-pulling. And I thought, if I start in September, then I would surely get craftsmen for the summer of the following year....we would like to continue, to insulate the basement, solar thermal to reduce gas consumption. But no way, no possibility. And it is on a scale that we cannot do ourselves. Everyone is renovating, insulating and installing heat pumps like crazy, there is simply no one to be found. After months of unsuccessful searching, I am about to just give up on the renovation of the ground floor and the solar thermal. It will just stay as it is. It’s not my fault either. I am already out of nerves before we could even start.

So I can't quite follow the first part. Do you mean that the state should actually pay the pension regardless of the contributions? Where is that stated?
Or are you talking about non-insurance benefits? It is disputed whether the subsidies cover these benefits or not, as this largely depends on the specific delineation of the benefit. But I think going deeper into that would be going too far here...

The second part describes the theoretical approach very well, but productivity increases are not only passed on, they must always be high enough to offset both inflation and demographic changes. And that could have been foreseen (should have been foreseen) with the introduction of the pay-as-you-go system that this would not always be the case.

Now to the third: Theoretically, that is correct for insurances.
The pay-as-you-go system works well when the recipients of benefits are statistically always fewer (or the benefits are always lower) than the contributors (contributions). So in risk insurances and possibly health insurances. But since we live longer and have fewer children, this does not add up programmatically for pensions.
But in my model it would only be partly an insurance ("the basic pension"). The rest would be an investment. This would then actually be saved as an individual capital stock and, depending on the choice, invested and then depleted along with the resulting return by the end of the working age. Here there would also be corresponding options: payout as a pension or as a lump sum. The advantages lie in independence not only from the demographic and economic development of one’s own economy but also a better diversification (if appropriate investment objects are chosen). From an individual point of view, there is also greater freedom and security in that the payout amount depends on individual personal decisions and not on state decision-making processes.

So now one might say, well, that is basically already the case. I just think that the share of statutory pension contributions in view of the expected pension benefits is far too high. It has to be this way now because we have more and more retirees and fewer contributors. But sooner or later something has to change. Or you simply levy more taxes right away and make it completely tax-funded and through basic security. That just wouldn’t be enforceable, which is why I realistically assume that people will probably just wait for the baby boomer generation.