Germany’s central bank is arguing that the country’s retirement age should ultimately be raised another two years to 69, a call that received a frosty response from the government.
The government decided a decade ago to raise the retirement age from 65 to 67. The increase is being introduced gradually and will apply to all retirees by 2029.
Since then, there have been periodic calls for people in Europe’s biggest economy to work even longer. In its monthly report Monday, the Bundesbank said consideration should be given to raising the retirement age to around 69 by 2060 to make sure the pension system is viable as the population ages.
Chancellor Angela Merkel’s spokesman, Steffen Seibert, said that the government “stands by retirement at 67.”
The Bundesbank said that demographic trends are such that the average age in German society will continue to rise, which will put greater stress on the pension system, and that the government should be accounting for the anticipated change now.
“In order for pension plans to reflect long term trends, official projections should go past the year 2030,” the bank wrote in its report.
Other countries in Europe are also trying to gradually increase the retirement age as they struggle with an aging population.
For example, France recently lifted its threshold to 62 from 60 for people who have paid social security contributions throughout their working life. For those who haven’t, the retirement age is 67. Italy, which is also struggling with high public debt, is gradually increasing its retirement thresholds, to 66 for both men and women by 2018.
What’s interesting is Germany was the first to adopt an old-age social insurance program in 1889, and it was designed by German Chancellor Otto von Bismarck. As the Social Security Administration says in a history post, “The idea was first put forward, at Bismarck’s behest, in 1881 by Germany’s Emperor, William the First, in a ground-breaking letter.”
Further, the SSA notes, “Germany initially set age 70 as the retirement age […] and it was not until 27 years later (in 1916) that the age was lowered to 65.”
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