Experts have recommended a new pension formula to the Federal Ministry of Economics. It would mean a retirement age of 68 years from 2042. Currently, the entry age from which a deduction-free pension is paid is already being gradually increased from 65 to 67 by 2029.
The basis is a scenario presented by the Ministry’s Scientific Advisory Board. The scientists, who are appointed to the advisory board by the economics minister, but who work independently there, warn of “suddenly increasing financing problems” in pension insurance from 2025 onwards.
Longer life expectancy should be taken into account
The researchers refer to demographic change as a reason: people are getting older, but at the same time there are not so many young people available to pay into the pension fund. One approach proposed by the advisory board: The retirement age should not remain unchanged if people were getting older.
Instead, the additional years would have to be divided according to a clear rule between working more and receiving a longer pension. “The best way to do this is to dynamically link the retirement age to life expectancy, so that the relationship between the time spent in work and retirement remains constant,” said Axel Börsch-Supan, Director at the Max Planck Institute for Social Law and Social Policy in Munich.
If the general life expectancy increases by one year, the working time should increase by eight months and the retirement time by four months. By 2042, the pension would be reached from 68.
Flexible entry with discounts would be possible
The Commission wants to replace the current retirement age with a more flexible “retirement window”. Within this window, people could retire quite regularly, but would also have to accept a lower pension than others who work longer. At the same time, people should have the opportunity to work longer than before – if they want to. In return, employees should be given a limited right to continued employment.
In its report, the advisory board criticizes the fact that the reforms of recent years, from maternal pensions to pensions from 63 to basic pensions, have further increased costs.
A key cornerstone of the grand coalition’s pension policy is also the double stop line: With it, the federal government has capped pension contributions at a maximum of 20 percent until 2025 and fixed the pension level at at least 48 percent.
From the perspective of the Scientific Advisory Board, a double stop line in Germany cannot remain in place for the long term without drastic changes, as otherwise the tax subsidies for retirement would have to rise sharply.
In 2019, almost 26 percent of the federal budget went into pension insurance. According to the Advisory Board, this proportion would have to rise to over 44 percent by 2040 and to over 55 percent by 2060 – even if the contribution rate is to be kept below 22 percent (instead of the previous 20 percent) and the security level above 48 percent. (RND)
Source: Kölner Stadt-Anzeiger – Kölner Stadt-Anzeiger by www.ksta.de.
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