Government advisory council proposal Will you retire at 68?

Status: 07.06.2021 6:49 p.m.

Advisors to the federal government consider it necessary to raise the retirement age to 68 years. Otherwise, the pension will soon be heading for a “financing shock”. The left reacted indignantly. Advisors to the federal government proposed a reform towards the retirement age at 68 around three months before the general election. There was a risk of “sudden increasing financing problems in the statutory pension insurance from 2025”, predicted the Scientific Advisory Board at the Federal Ministry of Economics on the occasion of its new report on the future of pensions. According to the current legal situation, the age limit for the pension without deductions will be gradually increased from 65 to 67 years until 2029. The proposal could catapult the topic of pensions more strongly into the debates ahead of the federal elections. Because the positions of the advisory board are likely to meet with rejection from the SPD, the Greens, the left and the trade unions. “This is the anti-social Oberhammer,” said left party leader Susanne Hennig-Wellsow with a view to the report. Economics minister Peter Altmaier had to “cash in immediately” the corresponding report from his advisors, “otherwise the pension election campaign will start tomorrow”. The left will “defend the rights of pensioners with tooth and nail”. What would be necessary would be a clear pension guarantee that bindingly excludes pension cuts as a result of the corona pandemic, said Hennig-Wellsow.

“Dynamic coupling of the retirement age to life expectancy”

The experts emphasized that the retirement age cannot be decoupled from the development of life expectancy in the long term. “Instead, the additional years of life must be divided according to a clear rule between working more and receiving a longer pension.” To this end, there should be a “dynamic link between the retirement age and life expectancy”. The relationship between the time spent in work and in retirement should remain constant. According to current projections of life expectancy, such a rule would reach retirement age in 2042 at 68, said the director at the Max Planck Institute for Social Law and Social Policy, Axel Börsch-Supan, who was in charge of the report. The advisory board emphasized in its announcement: “Should life expectancy decrease, the retirement age may also decrease.”

“Sharply increasing subsidies from the federal budget” necessary

By calling for the retirement age to be linked to life expectancy, the committee made a proposal that has been causing waves in the pension policy debates in Germany for years. It is illusory to expect “that higher contributions and a lower pension level can be avoided in the long term”, according to the panel of experts. In the opinion of the advisory board, “sharply increasing subsidies from the federal budget” would have to flow into the pension fund if the valid holding lines for contributions and the pension level were to be maintained. “That would be at the expense of future investments, for example in education, infrastructure and climate protection, and would undermine the sustainability of our social system,” said the chairman of the advisory board, Klaus M. Schmidt, according to the announcement. The advisory board’s proposals also include making existing pensions less dynamic than new pensions when it comes to pension increases.