Is the Pension at 70 Making a Comeback in Germany? Let's Take a Peek!
- Written by Daniel Bakir
- ⏰ Reading Time - Approx. 2 Mins
Will the retirement pension at age 70 be reinstated soon? - Pension eligibility at 70 to be reinstated soon?
Diving into the annals of history, you'll find that the pension at 70, which once existed in Germany, was introduced by Reich Chancellor Otto von Bismarck in the late 19th century [1]. Back then, 70 was the retirement age, and the pension at 70 symbolized a substantial social and political development. Although the old-age benefits at that time weren't opulent, and many didn't even reach 70, the "Law on Invalidity and Old-Age Insurance" of 1889 marked the third fundamental social law in the German Empire after the introduction of accident insurance and statutory health insurance [2]. This laid the groundwork for the modern pension system in Germany.
Nowadays, the pension at 70 has transformed into a bogeyman as few desire to work that long [1]. thanks to current legislation, one can retire as early as 67. Some long-term or "particularly long-term insured" might even retire at 63 in certain cases [4]. However, working until 70 isn't mandatory—it's a choice for those aiming to boost their pension with extra earnings [1].
For years, there have been discussions about increasing the retirement age further [1]. The reason for the potential increase is the demographic development affecting the pension fund due to increasing life expectancy and the retirement of birth-rich cohorts, causing pressure on the pension system since there are fewer contributors to cover more pension recipients [1][4].
Who Will Retire at 70?
Currently, the retirement age increases by one or two months for each cohort retiring [1]. When the birth cohort of 1964 retires in 2031, the process is completed for the time being, and the pension at 65 will have become the pension at 67, as decided by legislators in 2007 [1]. Between 2031 and the future, the ratio of contributors to pensioners will worsen [1][4].
Some experts propose a further increase in the retirement age, for example, to 69 or even 70 years [1]. Economists have advocated for this idea, and it's been debated in politics. However, it faces opposition, such as from the German Trade Union Confederation, who argue that the pension at 70 is not feasible for people, especially those in physically and mentally demanding professions who can't work that long [1].
Raising the retirement age to 70 is not inevitable, though. Alternatives to relieve the pension fund include reducing the pension level, cuts to early retirement, or increasing tax subsidies (at the cost of other sectors) [1]. Recently, the idea of a state-owned equity pension has gained popularity, where contributions are invested in the capital market for long-term benefits [1][3].
- Pension
- Pension insurance
- Pension fund
- Otto von Bismarck
References
- Wirtschaftswoche
- BBC News
- Financial Times
- Deutsche Welle
- The debate about increasing the retirement age to 70 in Germany, a move proposed by economists and discussed in politics, is opposed by parties like the German Trade Union Confederation, who argue it may not be feasible for everyone, especially those in demanding professions.
- Alternatives to raising the retirement age to 70 in Germany include reducing pension levels, cutting early retirement, or increasing tax subsidies, while a growing idea is a state-owned equity pension, where contributions are invested in the capital market for long-term benefits.
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- Pension fund
- Otto von Bismarck
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