The German Pension Problem

German Bank

With the massive losses coming from the global financial crisis in 2008, many countries were affected, some were able to bounce back and recover, some are still recovering, while others seems to have a hard time getting up from the financial turmoil. For some—especially for those big countries that has the economic capability to rise again, have managed to recover and come up with strategies to fill their flaws.

On the other hand, some are still having a hard time recovering from the havoc that the global financial crisis in 2008. Though it is safe to say that they are recovering, and that their economic statistics are rising—gradually; but then—with the abrupt alterations in the market, some are still having a hard time coping up with these changes.

Pension Problem

Take Germany for example, a country that has found an easier path than most through the global financial crisis and is now even announced as the world’s best nation. However, they are still having some problems within their economic status, particularly on the nation’s pension which is currently having a crisis.

The German Central Bank has said: that if Germans—who enter the labor market today, wants to have the same level of pensions as their predecessors, they will have to work until they are 69 years old. This came from the Bundesbank, who noted that the state would not be able to keep payouts at current levels, unless the retirement age went up or if the pensions contributions increases.

In accordance to this, the retirement age is in any due to rise from 65 to 67 by 2030, however, some said this should go up to 69 at some stage before 2060. Analysts have noted that changes are inevitable—yet needed to secure financial sustainability of the pension system, and added that there evidence that longer working life and higher retirement age should be given more consideration.

Thus, this added the conclusion that the higher of premiums would harm economic growth and quality of life. High premiums raise the strain on those paying the contributions and an increasing high burden of payments has negative consequences on economic development.

Demographic Changes

On the other hand, Germany’s chancellor: Angela Merkel through her spokesman: Steffen Seibert, have commented on the certain issue.

She said thatthe retirement at 67 is a sensible and necessary measure given the demographic development of Germany. As such, demographic changes noted that the generation of people born shortly after the second world war was now retiring and that life expectancy was higher, however, birth rates were lower than in the post—WWII surge, meaning that workers’ contributions to state coffers were failing to keep up.

In relevance to this statement: The issues affecting the eurozone’s largest economy are also reflected elsewhere in the bloc. Which is, according to the European Commission Statistics: Germany has the second highest portion of people aged over 65 or over 21% after Italy which has over 21.7%.

Conclusion

With the current situation being analyze and thoroughly concentrated on, Germany has come up with the idea of extending the retirement age, so as to balance the contributions, thus give its pensioners the right level of pension they deserve. This might be a bit gradual when it comes to achieving its goal, but will surely give a much better outcome in the future.