07.10.2022

Why German women retire at 65 years of age – as men

In Germany – as in Russia – is now also discuss the retirement age. Preferences for women in terms of retirement here cancelled. But the challenges of an ageing society is not a solution.Unlike unexpectedly erupted in June the debate about raising the for the first time since 1932 – the retirement age in Russia, the retirement theme in Germany is discussed permanently. Over the past decade the country has experienced several significant changes in the pension system including raising the retirement age.

Now in Germany there is a gradual transition from 65 to 67 years as the age of retirement. This means that to the same figure at 65 years gradually add 2 months. At the moment the formal age of retirement is 65 years and 6 months. In 2030, the new retirement age will be in Germany for 67 years. Unless, of course, there will be no new changes. But it’s real: in June of 2018 beginning of the work of the pension Commission of the Federal government of Germany, which should within the next two years to submit their proposals on improving the pension system of the country.

Why is the average pension for women in Germany is lower what in men

However, it is already clear that one of the fundamental principles – the equality of men and women will not be reviewed. This means that the retirement age in Germany, as now, will be a single! As told DW one of the most famous German experts on the pension system, Professor, Institute of Finance and sociology of the University of Freiburg Bernd Raffelhuschen (Bernd Raffelhüschen), in the past, women in Germany too, retired early.

“But only women statistically live longer than men – therefore, from this point of view, women really should be given the opportunity to work longer. But this idea was extremely unpopular (among the population. – Ed.) and so we in Germany now adhere to a uniform retirement age for both sexes,” explained Raffelhuschen.

This, however, does not mean that the amount of pension for men and women in Germany are the same. Thus, the average pension for men in West Germany amounted at the end of 2016 1050 euros. Women – 703 Euro. The reason for this difference is that the amount of pension in Germany depend on the level of wages. And since men are generally higher, and Housewives among women is also much more, and the sum of deductions to the pension Fund for men at the end of the working life is greater. And, consequently, the pension. There are, however, various mechanisms that compensate for these disparities, but introduced them relatively recently and they are not always.

The main problem of the pension system of Germany

Problems in the pension system of Germany, however, is not limited to the difference in pensions for men and women. All the complicated demographic processes, with varying degrees of severity are now in the Western world: the birth rate is declining, life expectancy is increasing, the society is aging.

In other words, workers who pay contributions to pension funds, it becomes less and pensioners more and they get money from these funds over the long term, because the longer you live. If such a situation is not to reform the pension system under the weight of financial obligations at some point simply collapse.

In Germany, for example, currently one pensioner aged over 65 years account for three of the resident working age. In 2030 “feed” one pensioner will have only two employees. What to do?

Three way German pension reform

“Variant, in fact, only three: drastically reduce pensions, to significantly increase insurance pension contributions or raise the retirement age to the number of employees has increased, while the number of pensioners has decreased”, – explained in an interview with DW, the expert of the Institute of German economy in Cologne (IW) Costner Susanna (Susanna Kochskämper). Since the first two versions of the German society, as a rule, strongly rejects and remains only the third path, she said.

And if you radically change the pension system and Finance its only taxes? “But it won’t change the essence of the demographic problem: there is a reduction in the share of working – those who are able to pay contributions or, in this case, to bear the main tax burden, as tax revenues from pensioners is significantly lower,” – said the expert.

Agrees Professor Raffelhuschen. “Subsidies from taxes should be used if the pension Fund has to pay a pension that was not funded by contributions from the employee, he says. For example, if a pension for years of maternity or retirement in connection with those or other decisions of the state in the social sphere. In other cases, taxes are not necessary – provided, however, that we are talking about a pension system that is based on independent pension funds, which have no relation neither to the state nor to its budget.”

Raising the retirement age is inevitable

This important caveat German expert explaining the difference between the pension systems in Russia and Germany, however, does not negate his basic conclusion: raising the retirement age, it seems, is in modern conditions inevitable – and for both countries. Not by chance in Germany, along with the ongoing changes in the pension system has already started the discussion about the fact that after 2030 to work, you may have up to 70 years.

Another thing is that real pension reform is a package of measures and should not be confined to the increase in the retirement age. In response to our question about what would Professor Raffelhuschen advised the Russian colleagues, he answered evasively: “In this case, I would have thought, rather, about the introduction of a system of retirement accounts that are for the payment of pensions would take into account the lifetime of each retiree. This pattern is common in the countries of Scandinavia. Not just raise the retirement age. Well, as for the age… you Know, I taught in Norway, and there before 70 years to retire is impossible.”

But the average life expectancy in Norway is, to put it mildly, somewhat different from Russian, said we. The realities of modern Russia, about 40% of men before the new pension vozrasta 65 years not survive. The Professor however is not confused.

“Yes, agreed Bernd Raffelhuschen, but age is not important in cases when a person does not die before retirement and when you die. And the question is, how many years he will live. Most men suffering from alcoholism or excessive Smoking, do not live to retirement age – but those who survive will live another 5, 10, 20 years. And the pension system should be able to Fund it”.

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