German Minister of Finance, Mr. Schäuble, recently suggested, that regular pension age be raised to 70.
To make overseas readers not familiar with the pension concept in Germany understand: the public pension system here is a generation contract, by which every employee working now pays an obligatory pension fee that goes toward old folks’s pensions. Whereas the pension of those, who are in the work process now will have to be funded by future generations, when their productive time comes.
Other than elsewhere, where – if I understand correctly – monies are paid, invested and at a later time paid out to the benefit of those, who originally set aside the funds. Whereas in Germany (and elsewhere in Europe), the fees of those working goes directly toward the generation of those already out of work. Problem with European population development being, that fewer young working folks have to pay for more and more older folks, who are also living much longer, thus also drawing their pension a lot longer. So the age, at which a worker is entitled to retire and start drawing a pension from the public system, was already upped from first 60 (when I started to work) to later 65 to now 67 for people born 1968 (my year of birth) and younger.
Now, politics are discussing to further raise the bar to 70. Here, I think, it is getting absurd. Nobody wants to employ people any older than 50, but everybody is asked to work full time to the age of 70? Who will explain, how this is going to work?
I think, the generation idea itself is great, taking into consideration, that funds may be lost in time, due to whatever economical farings. Thus, a whole generation may be left without anything to live of, whatsoever. But a society as a whole will always have something to share, even if this something might at times be less than desirable.
Taking into account, that human working environment changes (less and less physical labour, more and more automatization, computing and brain work) but productivity as a whole grows worldwide, one just needs to shift the definition of what funds the pension system. It should no longer be defined by headcount of workers and years of labour, but by productivity.
Take a percentage of added value of any given society or corporation for pension funding, not just from individuals. And stop the opt out exisiting for those, who can afford private pension funding, or forgo it completely, due to wealth-overload (this option doesn’t exist for Joe/Jane Doe, only for those above a certain income level). Problem solved and no need to work overtime, after you’re dead.