Germans Furious After Bundesbank Demands People Work Until Age 69

by Tyler Durden

Aug 22, 2016 3:00 AM

 

There's something rotten in Denmark's neighbor. Amid rising islamic terror incidents, Merkel denies any link to her immigration policies... but the government suggests the citizenry arm itself and stash 10 days worth of food and water "in case of attack or emergency," and now, despite constant proclamations of Germany's economy at the heart of European economic 'strength', the Bundesbank is calling for people to work until they are 69 (up from the current retirement age of 62)... and neither the government nor the people are happy.

As Germans live longer and lower birth rates mean fewer workers are available to replace retirees, the Bundesbank says people will need to work longer in order to meet pension demands. As The Local reported last week,

The German Federal Bank (Bundesbank) said in its monthly report on Monday that by 2060 Germany should increase the retirement age to 69 from the current 65.

 

The retirement age is already set to reach 67 by 2030, but the Bundesbank said that even with the current favourable financial situation and this increase, “further adjustments are inevitable”.

 

“At the same time, a longer working life will not be taboo,” said the report.

Because Germans are now living longer and having fewer children, the current system will not be enough to meet targets. Once the baby-boomers have all retired, there will be fewer new workers to fill the gaps and thus fewer contributors into the system - especially since Germany has been seeing lower birth rates in recent years.

A longer working life should be able to stabilize pension levels so that retirees would receive 44 percent of their average salary: maintaining the current plan could see pension levels fall to just over 40 percent.

 

And what the bank proposed to ensure stability of the pensions system is a further gradual increase in the legal retirement age, already set to go from 65 to 67 by 2029, to reach 69 years by 2060.

The proposal has sparked fury among Germans and federal government officials are speaking out against the central bank's demands...

Economy Minister and Vice-Chancellor Sigmar Gabriel was swift to condemn it, saying: "A factory worker, a shop assistant, a nurse, a care-giver would find this idea nuts. So do I."

 

Political parties, which are already warming up for general elections next year, are expected to make pensions a key theme of their campaigns.

 

With 20 million retirees eligible to vote, politicians will be seeking to win on issues ranging from the level of future pensions and the question of equalising pension payments in east and west Germany, to the amount of contributions to be levied on future working generations.

But no one expects to win votes by telling Germans they would have to work two years longer, as the issue is making many nervous, particularly at a time when many savers are seeing little gain from their long-term investments against the backdrop of the European Central Bank's low interest rate expansionary policy.

"Working until 70 while others feast on canapes and some are unemployed," huffed a reader on Spiegel Online.

 

Huether however argued that the Bundesbank's suggestion was likely to be the "least damaging solution for everyone".

 

But, German politicians' refusal to address the issue on what comes after 2030 simply shows a "fear of confronting the truth," said Boersch-Supan, an economist at the Max Planck institute, adding that "what the Bundesbank is talking about actually concerns those who are born after 1995, that means people who are only turning 20 now. It's not about making someone who is working now retire only at 69 or 70."

We suppose he meant this in some "wee it's not so bad" way... but the bottom line is that under the surface of a market (bond, stock, credit) representing the manipulated view of the world is a Germany that is anything but stable...both socially and economically; and with the core of  the EU on such shaky ground ahead of elections, one can only add that brick to the wall of worry to climb when buying dips in the stock market.