Germans might have to work even longer before they can enjoy their golden years.
In its monthly report, the Bundesbank has proposed increasing the retirement age to 69 by 2060 to stabilize the country’s pension system in the face of negative demographic trends.
According to the central bank, further adjustments to Germany’s pension system are “unavoidable” given an aging population due to the increase in life expectancy and the decline in the birth rate.
The numbers tell the Bundesbank’s story: Today there are 53 pensioners for every 100 workers paying into the public system, but the figure for retirees will grow to 68 by 2030.
“A longer working life shouldn’t be taboo,” wrote the authors of the report.
“The federal government stands by retirement at 67.”
Germany is already gradually increasing its retirement age from 65 to 67 in order to cap pension contributions at 22 percent of a worker’s gross income and ensure pension benefits do not fall below 43 percent of a worker’s average salary through 2030. Retirees currently receive 48 percent of their salary.
The Bundesbank doesn’t believe the government’s math: It warned that pension benefits would fall to 40 percent of a worker’s average salary if government projections are extended through 2060. Increasing the retirement age to 69 would close the fiscal gap and keep pension benefits at 44 percent of income.
But the German government swiftly rejected the Bundesbank’s proposal as talk.
“The federal government stands by retirement at 67,” said Steffen Seibert, spokesman for Chancellor Angela Merkel. “There are always discussions and sometimes the Bundesbank participates.”
The government’s current plan is already controversial among workers and trade unions. Germany’s largest union, Verdi, supports increasing pension benefits to 50 percent of income, which would cost an additional €52 billion through 2029.
Even Chancellor Angela Merkel has acknowledged that current pension benefits are not enough to live on. Most Germans supplement their public pensions with private plans and savings. But private pension plans are also taking a hit due to record low interest rates.