work until 70 years old

In 1889, Otto von Bismarck invented the public retirement pension in Germany and set the retirement age at 70 years. At that time, only a lucky few made it alive to collect it. Now, 137 years later, Germany has proposed recovering that age limit so that its employees can retire. So that they later say that history is not cyclical and pendulous.

As and how to collect ReutersChancellor Friedrich Merz last week presented a 33-point plan to reform the German pension system. Merz’s plan has a priority objective: that the pension system does not collapse. To achieve this, the German chancellor is betting on a package of measures that involves working more and forgetting about early retirement.

Germany doesn’t get it right. Germany has one of the oldest pension systems in the world, but also one of the most stressed. Germany’s problem is an old acquaintance for Spain: every time there are fewer workers to pay the pensions of more and more retirees.

According to data According to the German Federal Statistics Office, there are now 33 pensioners for every 100 people of working age. In 2070, that figure could reach 61 pensioners for every 100 contributors. That means less than two workers per retiree. By 2035, the forecast is that one in four Germans will be over 67 years old.

With the current financing system, today’s German workers pay the pensions of today’s retirees. Without a sufficient workforce to contribute contributions, the scheme does not hold. and the baby boomers They are reaching retirement right now.

We live longer, we work more. The most striking proposal of those presented by Merz is to link the legal retirement age to life expectancy in Germany. That is, since we live longer, employees must also contribute for more years. The easiest way to do this is to delay the minimum legal age for retirement.

Currently, anyone who retires before 2023 will be able to do so at 67, just like that in Spain. However, with the new plan that the Foreign Ministry has put on the table, that age would rise to 67.5 years in 2041, to 68 in 2051, and would evolve until reaching 70 years by the end of 2090.

We are not facing a sudden change, but rather the executive seeks to progressively adapt to the demographic ramp of its population, trying to cushion the strong impact that the planned mass retirement will entail. for the next decade. Merz sold it as a guarantee for young people: “No citizen has to worry,” he said. The system, according to him, is not going to collapse, but “All the elements of this reform package must be implemented quickly and make up a comprehensive concept that only works as a whole.”

Goodbye to retirement at 63. In addition to extending the legal age to access retirement, the German Chancellor’s proposal is complemented by a tightening of the requirements to qualify for early retirement, the so-called Rent mit 63the formula that allows you to retire at age 63 without penalty if you have contributed for 45 years. It is estimated that about 270,000 Germans take refuge each year in a early retirement without penalty.

Unions see it as a direct blow to blue-collar workers. In statements collected By DW, Christiane Benner, leader of IG Metall, pointed out that the proposal “completely ignores” the conditions of those who work in factories or construction, because spending the last few years behind a computer is not the same as spending the last few years on a scaffold. To reduce this difference, the Government proposes that those who cannot continue for health reasons have easier access to this early retirement, which will no longer be automatic for those workers with long-term careers.

The Swedish model as inspiration. Along with the changes in the retirement age, the package of measures proposed by Merz also points to a change in the way in which Germany manages its employees’ pension funds, opting to invest part of them in capital markets. The chancellor has not invented anything that is not already being applied in other European countries. An example would be the swedish systemwhere 2.5% of employees’ salaries go to individual accounts that are invested in funds.

In Germany, the proposal is to start with an additional 0.5% on the salary and gradually reach 2%. Each worker would have their own account. Merz estimates that the fund would channel at least 30,000 million euros a year to the markets. Critics warn that the stock market could fall, and that a sharp decline at the wrong time could pose a serious risk to the liquidity of the pension system.

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