Want to support Global Action on Aging?
Later? Critics Blast Pension Reform Ideas
August 24, 2003
The commission exploring ways to save Germany’s failing pension system has suggested raising the retirement age from 65 to 67. Politicians from across the spectrum have expressed outrage at the idea.
German government has no choice but to make radical changes to its
state-funded pensions if the system is to survive. Bert Rürup, who heads
the commission that bears his name, has been charged with figuring out how
to save a system which is burdened to the point of collapse largely due to
the country’s ageing population.
2.3 persons work to support one retiree in Germany. But by 2030, according
to reliable demographic estimates, that ratio could be more than halved.
The Rürup Commission warns that, without reform, pension contributions
would have to rise to between 24% and 25% of gross wages by 2030. Right
now they are 19.5 percent.
the commission will officially present its proposals on Thursday,
politicians, labor leaders and scientists have already begun to criticize
one of the central reform suggestions, the raising of retirement age by
two years, to 67, by 2025.
my estimation, raising the legal age of retirement is not going to help
very much,” Franz Müntefering, Social Democratic parliamentary group
leader, told reporters. The problem, he argued, is that most Germans today
retire at age 59 or 60. He wants Germany to implement measures that would
bring the actual retirement age of most closer to 65.
conservative colleague and head of the Bavaria-based Christian Social
Union, Edmund Stoiber, echoed the sentiment, saying it made no sense to
talk about raising the retirement age “when the average person goes into
retirement at 60 anyway.”
and labor leaders have been critical of the widespread practice of early
retirement, saying many companies abuse it, using it as a way of
transferring the costs of layoffs to the state.
60 percent of companies we don’t have one employee over the age of
50,” said Ursula Engelen-Kefer of the German Trade Union Federation. The
head of the German Institute of Economic Research, Klaus Zimmermann, told
the Welt am Sonntag newspaper that ways had to be found to encourage
companies to employee older workers longer.
can’t understand that we’re talking about a possible retirement age at
65 when industry considers people over 55 to be useless and wants to
quickly put them out to pasture,” Christian Wulff, premier of Lower
Saxony, told NDR Radio.
According to the newspaper Die Welt, the Rürup Commission
report, which will officially be published on August 28, calls for a
reduction of pension levels from 48 percent to 40.1 percent by 2030.
Citing government sources, Die Welt said the government wants to
begin putting new measures into effect starting in the autumn. In addition
to upping the retirement age from 65 to 67, a ban would be put into place
on early retirements before the age of 64. The yearly cost-of-living
increase will be reduced by 0.5 percent as part of a sustainability
The commission is likely to recommend smaller annual increases or
even a freeze in pension payments. German retirees currently see their
payments raised in line with the average increase in gross wages.
“One year without an increase in pension payouts alone does not
solve any of our pension problems,” Rürup (picture) told the
Frankfurter Allgemeine Sonntagszeitung, saying long-term and even
difficult solutions had to be found to ensure the system remains solvent.
But the reforms are proving so unpopular, even before officially
out of the bag, that it is unclear whether any of the commission’s
suggestions will be put into place. Opposition politicians and labor
unions have warned the current red-green coalition to keep its hands off
current pension payments, saying that retirees had a right to a reliable
Still, most Germans do not seem to believe in the reliability of
their retirement funds. According to a recent poll, a solid majority
believes that due to the ageing population, pensions payments will
continue to sink in the long run, eventually reaching the level of welfare
Ulla Schmidt, the minister of social affairs, said she will present the government’s package of comprehensive pension reform this fall.