A proposal made by the German Bundesbank to raise the national retirement age to 69 by 2060 has been slammed by the country’s vice-chancellor who has called it “stupid”.
The suggestion by the federal bank is in recognition that the state pension system is coming under pressure as people live longer.
But the idea has not found favour with Vice-Chancellor Sigmar Gabriel. He raged: “If I was a banker at the Bundesbank then I would also come up with these ideas. These are all people with a high incomes, little physical stress and a long life expectancy and large pensions. Craftsmen, saleswomen, nurses, geriatric nurses think this idea is stupid, and so do I.”
The German pension system came into effect under Germany’s first chancellor, Otto von Bismarck, in the 19th century. It was designed so the young paid for the old, and employers paid a share. An aging demographic and increased lifespan has meant the young have had to support more and more of the elderly population.
The retirement age for Germans is scheduled to rise gradually from 65 to 67 by 2030, but the Bundesbank estimates this increase will not be enough to allow the German government to keep state pensions at the level it targets – at least 43 percent of the average income, from the 2050s due to people living longer.
Finance Minister Wolfgang Schaeuble was criticised by his Social Democrat coalition partners in April when he proposed linking the retirement age to life expectancy.
However unpalatable it may be the issue is likely to be a hot topic in the country’s coming federal election.