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Pensions from age 67

July 20, 2011

The right answer to demographic change

Retirees with their grandchild.

Key points

  1. Raising the pension age to 67 is the right answer to demographic change.
    Birth rates continue to remain low while life expectancy continues to increase. This is changing the ratio of people paying into the system to people claiming pensions. Raising the pension age counters this change and strengthens the statutory pension insurance system.
  2. Raising the pension age to 67 promotes intergenerational equity.
    Raising the pension age to 67 means that today's children, when they enter working life, will not have to pay higher pension contributions for today's workers, who will then be retired. Raising the pension age shares the burden of demographic change fairly across all generations.
  3. Raising the pension age to 67 strengthens the state pension system.
    Statutory pension insurance must adapt to social, demographic and economic change. Raising the pension age is key to making the state pension system ready for the future.
  4. Raising the pension age to 67 eases the skills shortage.
    The dwindling numbers of people of working age is expected to produce a noticeable skills shortage from about 2015 to 2020. Raising the pension age eases the expected skills shortage.

Facts and figures

  • Mainstay of old-age provision in Germany
    Today's statutory pension insurance system evolved from a law introducing invalidity and pension insurance under Bismarck in 1889. In its more than 110 year history, the state pension has developed from a subsidy towards general living costs to form the main part of most people's retirement income. Today, the statutory pension insurance system is the mainstay of financial security in old age.
    So it stays that way, the German government is placing the system on a sound and stable footing. Raising the pension age is a key step in adapting statutory pension insurance to demographic change.
  • Demographic change
    The age structure of the population is changing dramatically. The 20 to 64 age group is expected to shrink by over five million by 2030, to a total of about 45 million. In the same period, the number of over 65s will grow by more than six million to some 22 million.
    This trend - with ever fewer young people and ever more older people - has far-reaching consequences for statutory pension insurance. The ratio of people in working age to people claiming a pension will fall from 4:1 in 1991 to only 2:1 in 2030.
  • People in Germany are living longer
    On average, people in Germany are healthier and, happily, live longer than before. Remaining life expectancy from age 65 is already about four years greater for both men and women than it was in 1960. Average life expectancies will rise further by 2030.
    If people live longer, pensions are paid for longer. Lengthening life spans are another reason why the pension age has to be raised. In the last 40 years, the average length of retirement has grown by seven years to around 17 years today. This represents a huge increase in pension outlay that has largely gone unnoticed. The statutory minimum pension age has not previously been increased to reflect this change.
  • Sharing the burden between young and old: Raising the pension age to 67 promotes intergenerational equity
    As a result of demographic change, young people can expect contributions to increase. Raising the pension age limits this increase.