Many retirees will get less money than y currently spend on consumption and flat. This shows that debate on old-age poverty is far too narrow. September 14, 2018, 14:51 Uhr189 comments
Federal Finance Minister Olaf Scholz (SPD) has raised a heated debate with his call for a stabilisation of pension level up to 2040. Some accuse him of not being financed. Ors complain that this would preconceive federal government’s pension commission, which 2020 wants to present its recommendations. With all criticism, this discussion is important and urgently necessary. A new study shows that more than half of workers who retire soon will not receive enough pensions to maintain ir existing standard of living. The discussion should refore not only revolve around old-age poverty, but also how people can secure ir standard of living in old age.
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The study by German Institute for Economic Research shows that 55 to 64-year-olds per capita spend an average of 1,370 euros a month – but can expect pension payments of only 1,230 euros. There are, of course, major differences between population groups: ten percent people with lowest incomes spend an average of 540 euros, ten percent with highest income above 3,000 euros.
The differences in pensions are similar: over a third of people who are about to retire have entitlements from statutory and occupational pensions of under 1,000 euros per month. People who are entitled to an official pension are clearly better placed.
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The bottom line is that 58 percent of early pensioners are currently more than y can expect from statutory and private pensions. In or words, se people will have to tighten ir proverbial belts when y retire. Also consideration of private insurances such as life insurance or riester pensions does not make much difference here, because y are mostly people with higher incomes and assets, which can also fall back on such private provision. After all, proportion of those who cannot maintain ir standard of living in old age is reduced to 41 percent, although private assets (e.g. real estate or savings) are taken into account. But also this number is far too high.
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A closer look also shows that certain groups are significantly more affected by se cuts in ir standard of living. For example, 70 percent of all women who are about to retire will not be able to maintain ir standard of living – proportion of men is only 48 percent. Mors are particularly affected by fact that many of m have been able to earn less years of contribution and thus acquire lower entitlements – despite mors ‘ pensions. It is important to stress that consideration is given to households, which is taken into account when women live in a partnership and may benefit from ir partner’s pension.
Households with one person and (former) single-handed persons will also receive less pensions in old age than y currently spend on consumption and housing – which is already not much. Interestingly, re is no significant difference between East and West Germany in this issue. It is not surprising that people who have worked part-time for long periods often have to limit ir standard of living in old age much more frequently.
In future, more pensioners will meet
What does that mean? A first important point is that ever-recurring debate on age poverty is far too narrow. It is not only age poverty that is a problem, but also fact that statutory pension is already so scarce, that half of those who are now retiring cannot keep ir standard of living. It is equally important to realise that decline in level of pensions, increase in life expectancy and frequently interrupted employment biographies will furr increase proportion of people who, in ir old age, are in some way strong in ir living standards. The private burden on health and care will probably continue to increase.
The debate on question of what is an appropriate standard of living in old age and how we can enable it as a society as much as possible is refore urgently needed. The policy has different options: it can increase taxes, contributions or retirement age to stabilize pension level. It can strengn private and occupational pensions. Or it can decide on a stronger redistribution for benefit of people with low pensions. Whichever choice you make, it is time for politics to take advantage of good economic situation in order to provide long-term sustainable and adequate pensions – far beyond vague promise of a “double line”.
