Compliance February 1, 2006

Germans to Bump up Retirement Age to 67 from 65

February 1, 2006 (PLANSPONSOR.com) - A government official said Wednesday that the German government will raise the country's retirement age in steps to 67 from 65 by 2029 - six years earlier than was originally anticipated.
Reported by

Labor Minister Franz Muentefering revealed the plans in response to the severe strains on the German pension system, Reuters reported. Germany’s aging population and shrinking pool of workers paying social security is straining its pension system, financed by automatic deductions from wages.

The ruling coalition of conservatives (CDU/CSU) and Social Democrats (SPD) originally said they would bump up the retirement age to 67 by 2035 in steps of one month per year starting in 2012. However, they signed onto a plan at Wednesday’s cabinet meeting to speed up the measure, according to the news report.  Germany likewise plans to increase to 63 from 60 the age at which Germans can receive a partial pension.

Muentefering had proposed that Germans should be made to work longer before receiving their state pensions and had faced strong opposition from conservatives as well as some fellow SPD members. The official asserted that parliament should pass the legislation by the end of this year or at the start of 2007.

Employers, seeking to bring down non-wage labor costs from their current level above 40%, support the proposal to raise the retirement age. Germany also needs to encourage its citizens to work until the existing retirement age. Only about 40% of Germans aged 55 to 64 are currently working, compared with 65% to 70% in Scandinavian countries, the news report said.

Muentefering has previously suggested offering companies a subsidy to take on older unemployed people.

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