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Germany\u2019s pension system won\u2019t be financially viable in five years\u2019 time without reform, according to Rainer Dulger, the president of the Confederation of German Employers\u2019 Associations.<\/p>\n
The influential lobby group represents around 20 million employees in the German workforce. Dulger\u00a0told Germany\u2019s\u00a0Bild am Sonntag\u00a0newspaper\u00a0Sunday that the German economy is weakening and the social system is on \u201cthe verge of collapse.\u201d<\/p>\n
\u201cThe costs will explode,\u201d he said, according to a translation by CNBC.<\/p>\n
In 2019, contributions into Germany\u2019s public pension plans represented around 10.1% of the nation\u2019s GDP, but this is expected to increase to 12.2% by 2070 under the current system, according to The 2021 Ageing Report published by the\u00a0European Commission.<\/p>\n
That 2 percentage point increase is one of the highest forecasted changes in the European Economic Area, beaten only by Ireland and Norway, where the contribution to the public pension systems is expected to be 2.6 percentage points higher in 2070, and the Netherlands, where the percentage of GDP spent on pensions will be 2.2 points higher in five decades\u2019 time.<\/p>\n
Labor shortages and an aging population are contributing to the challenges faced by the German pension system, and the situation will be \u201cmuch worse\u201d by 2030, according to Jake Barber from financial services firm SJB Global.<\/p>\n
\u201cBy [2030], all baby boomers (people born shortly after World War 2) will be over 65 years old, and it is projected that within just a couple of decades, older people will outnumber children for the first time in history. If this happens, the current pension system will likely collapse due to being unsustainable,\u201d<\/p>\n
In Germany pensions are also funded by those who are currently working, which puts additional strain on younger generations as \u201cbaby boomers\u201d go into retirement.<\/p>\n
Right now there are around 50 people in retirement for every 100 workers, but that number is set to grow to 70 pensioners per 100 workers in the next 15 years.<\/p>\n
A possible solution is providing greater incentives for workplace and private pensions, and allowing those to have higher contribution limits and flexible withdrawal options, rather than a heavy reliance on state pensions, according to Barber.<\/p>\n
\u201cWithout these adaptations, the German State Pension runs a substantial risk of being underfunded,\u201d he said.<\/p>\n
Dulger suggested retirement age should be tied to life expectancy, saying it \u201cshouldn\u2019t be the case that increasing life expectancy leads to longer retirements.\u201d<\/p>\n
But German Chancellor Olaf Scholz\u00a0rejected calls to hike the standard retirement age\u00a0from 67 to 68 in June 2021 when he was finance minister.<\/p>\n
\u201cIt\u2019s not only based on wrong calculations, it\u2019s also socially unfair,\u201d Scholz said at the time, as reported by Reuters.<\/p>\n
Scholz also said there \u201cis no real need\u201d to increase the retirement age, despite a panel of governmental economic advisors suggesting the threshold should be pushed to 68 by 2024.<\/p>\n","protected":false},"excerpt":{"rendered":"
Germany\u2019s pension system won\u2019t be financially viable in five years\u2019 time without reform, according to Rainer Dulger, the president of the Confederation of German Employers\u2019 Associations. The influential lobby group represents around 20 million employees in the German workforce. Dulger\u00a0told Germany\u2019s\u00a0Bild am Sonntag\u00a0newspaper\u00a0Sunday that the German economy is weakening and the social system is on […]<\/p>\n","protected":false},"author":1,"featured_media":183201,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":{"facebook_10221280388112155_325455220908133":"","twitter_917774835383787521_917774835383787521":""},"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/wardoon.net\/en\/wp-json\/wp\/v2\/posts\/183199"}],"collection":[{"href":"https:\/\/wardoon.net\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wardoon.net\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wardoon.net\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/wardoon.net\/en\/wp-json\/wp\/v2\/comments?post=183199"}],"version-history":[{"count":1,"href":"https:\/\/wardoon.net\/en\/wp-json\/wp\/v2\/posts\/183199\/revisions"}],"predecessor-version":[{"id":183202,"href":"https:\/\/wardoon.net\/en\/wp-json\/wp\/v2\/posts\/183199\/revisions\/183202"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/wardoon.net\/en\/wp-json\/wp\/v2\/media\/183201"}],"wp:attachment":[{"href":"https:\/\/wardoon.net\/en\/wp-json\/wp\/v2\/media?parent=183199"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wardoon.net\/en\/wp-json\/wp\/v2\/categories?post=183199"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wardoon.net\/en\/wp-json\/wp\/v2\/tags?post=183199"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}