German central bank wants linkage of retirement age to life expectancy

German central bank wants linkage of retirement age to life expectancy

Tuesday, October 22, 2019 6:16 am

German Chancellor, Angela Merkel

Against the backdrop of an increasing pressure on statutory pension funds, Germany’s central bank (Bundesbank), on Monday recommended to link the retirement age of employees in Germany to the increasing life expectancy.

The Bundesbank stated in its report for Oct. 2019, that Germany’s statutory pension funds would come under considerable pressure in the future due to the demographic development, especially from the middle of the coming century onwards.

In the report, the central bank anticipated life expectancy to continue to rise as well as the large baby boom cohorts, from the 1960s to retire in the mid-2020s.

Bundesbank emphasized, however, that since 2012, the statutory pension age in Germany was gradually rising to 67 years in 2031, if the pension age remained constant after 2031.

This, it said, would be based on the unchanged years in which German employees would contribute to the statutory pension funds would be met by continuously growing pension phases of retirees.

“A systematic linkage of the retirement age with the increasing life expectancy will be a reform approach.

“The retirement age after 2030 could be raised in such a way that the ratio of pension to contribution years would remain roughly stable,“ Bundesbank said.

Accordingly, its plans, the 2001 birth cohort will retire in May 2070 at the age of 69 and four months

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