This is due to the risk of depletion of pensions due to aging and low birthrate.
German media Spiegel reported that the government is focusing on deciding when to retire based on the actual working life. This is a measure to ease the rapidly increasing pension financial burden due to aging and to strengthen intergenerational equity.
“It is fairer to adjust the timing of retirement based on the actual number of years of contribution, not the uniform retirement age,” Labor Minister Berbel Bath said in an ARD interview the previous day. “If someone started vocational training at the age of 16 and paid to the social security system for a long time, they should be able to retire earlier,” he said. “On the contrary, those who enter the labor market late due to their studies and start contributing later should work longer.” The principle is that “if you contribute early, you rest early, and if you contribute late, you work longer.” Jens Sheldekum Dusseldorf (Economy), a personal adviser to Treasury Secretary Lars Klingweil, also said, “The idea of increasing the retirement age to 70 is not realistic,” adding that the system is more valid. In particular, he stressed that the system should reflect the difference in cumulative working periods between those who get employed late after college education and those who start vocational training from the age of 16-18.
The German government will officially review the specific contribution training period at the new pension committee. It aims to prepare a legislative proposal by the middle of next year. Germany is one of the fastest-aging countries in the world, and the burden of pension finances is rapidly increasing due to a decrease in the working-age population and a decrease in the fertility rate. Accordingly, the German government is implementing various reform proposals such as adjusting the pension age, raising insurance premiums, and creating a special fund. However, attempts to raise the legal retirement age of 66 to 67 by 2029 are being delayed due to opposition from public opinion that values the ‘recht auf Ruhe’.
Against this backdrop, another pillar of pension reform, the bill to maintain the lower limit of the pension income replacement rate (pension package), crossed the threshold of the parliament on the 5th. The amendment to the Pension Level Stabilization and Generative Capital Act was approved with 318 votes in favor, keeping the income replacement rate of pension receipts at least 48% until 2031. Existing regulations had only guaranteed the lower limit until this year, and if abolished, the replacement rate was expected to fall to 44.9% in 2040 due to the retirement of baby boomers. The passed pension package also included measures such as recognizing three years of parenting as an insurance coverage period regardless of birth year and exempting some of the income tax if they continue to work after age 67.
EJ SONG
US ASIA JOURNAL
