The Old Pension at 70: A Regress or Progress?
Will the pension age remain at 70, or will it be reverted to an earlier age? - Will we reinstate retirement benefits at age 70 in the near future?
Taking a peek into the history books, you'll find that the pension at 70 was once a reality in Germany. Chancellor Otto von Bismarck introduced the compulsory pension insurance at the end of the 19th century, setting the retirement age at 70. This pension was a significant political milestone, even though the benefits back then were minimal and not accessible to many due to early deaths[1].
Fast-forward to today, the pension at 70 has become a dreaded specter. Few want to work until they're 70, and thankfully, they don't have to[1]. The legal retirement age stands at 67, but some with long-term or specific work histories can retire as early as 63[2]. The idea of working until 70 is still an option for those seeking extra income to supplement their pension[2].
However, discussions about raising the retirement age persist, fueled by demographic changes that put pressure on the pension system[2]. The rising life expectancy and the imminent retirement of large birth cohorts strain the pension fund[3]. These financial issues are only temporarily alleviated by the retirement age at 67[2]. Some experts propose raising it even further, with suggestions ranging from 69 to 70 years[3]. Yet, these ideas face strong opposition, particularly from trade unions, who argue that many people, especially those in demanding professions, can't work that long[3].
Who's Expected to Work Until 70?
The retirement age increases gradually, with each birth cohort that retires. This process is expected to conclude when the birth cohort of 1964 retires in 2031, raising the retirement age from 65 to 67[2]. Yet, there are no specific laws or decisions to escalate it to 70[3].
There are alternatives to strengthen the pension fund, but each comes with its own downsides[3]. These include reducing pension levels, cutting early retirement options, increasing tax subsidies, or investing a portion of the contributions into the capital market[3]. However, many of these solutions are unpopular and come with their own set of challenges.
- In the context of ongoing debates about the retirement age, some experts propose that vocational training could extend the careers of individuals, enabling them to work until 70, thereby bolstering the pension system, particularly in the health-and-wellness and industry sectors.
- The science of aging plays a crucial role in these discussions, as advancements in medicine and medical-conditions might enable people to work longer, thus easing the financial burdens on personal-finance and wealth-management industries.
- Despite these ideas, opposition from the community arises due to concerns about the impact on personal-wellbeing and the viability of vocational training for many, especially those in demanding professions where physical or mental strain may increase with age.
- Recognizing these challenges, policymakers might consider other strategies to bolster the pension fund, such as exploring innovative investment options in the finance industry, while simultaneously addressing the need for vocational training to help the workforce adapt and thrive in an aging population.
