Luther at that time did not attack the sacrament of penance as such. He even thinks the indulgences can be tolerated. But he attacked the center, out of which all the abuses came, and this was the decisive event of the Reformation.
But after this attack had been made, the consequences were clear. The money of indulgence can only help against those works which are given by the Pope, I. e , the canonic punishments. The dead in Purgatory cannot be released by the Pope; he can only pray for them; he does not have power over the dead. The forgiveness of sins is an act of God alone, and the Pope can only declare – and “Pope” also means every priest – that God has done it already. There is no treasury of the Church out of which the indulgences can come, except the one treasury, namely the work of Christ. No saint can do superf luous works because it is our duty to do everything we can anyhow; how can something be superf luous? The power of the keys, namely of forgiving sins, is given by God to every disciple who is with Him. The works of satisfaction are only the works of love; all other works are an arbitrary invention by the Church. Arid there is no time and space for them, because in our real life we must always be aware of the works of love which are demanded from us in every moment. Confession, which is made by the priest in the sacrament of penance, is directed towards God. You don’t need to go to the priest for this. In every “our Father” we confess our sins, and that is what matters and not the sacramental confession. Arid about satisfaction he said: this is a completely dangerous concept because we cannot satisfy God at all; if there is satisfaction, it is done by Christ to God, but is not done by us. So this concept has to disappear.
Purgatory is a fiction and an imagination of man, with no biblical foundation. The only thing which remains is absolution. And of course Luther was psychologically educated enough to know that a solemn absolution may have psychological effects, but he denied that it is necessary. The message of the Gospel, which is the message of forgiveness, is the absolution in every moment, and you can get it as the answer of God to your prayer for forgiveness; you don’t need to go to church for this.
This means the sacrament of penance is completely dissolved. :Penitence is transformed into a personal relationship to God and to the neighbor, against a system of means to obtain the release of objective punishments in Hell, Purgatory, and life, which the Roman system demanded.. In reality, all these concepts are undercut at least, if not abolished. Everything is put on the basis of a person-to- person relationship between God and man. You can have this relationship even in Hell. That means Hell is simply a place, but it is not a state. And that is abolished by the kind of Reformation idea of relationship to God.