Germany's pension system will collapse without reform, influential lobby group says

Germany's pension strategy won't beryllium financially viable successful 5 years' clip without reform, according to Rainer Dulger, the president of the Confederation of German Employers' Associations.

The influential lobby radical represents astir 20 cardinal employees successful the German workforce. Dulger told Germany's Bild americium Sonntag newspaper Sunday that the German system is weakening and the societal strategy is connected "the verge of collapse."

"The costs volition explode," helium said, according to a translation by CNBC.

In 2019, contributions into Germany's nationalist pension plans represented astir 10.1% of the nation's GDP, but this is expected to summation to 12.2% by 2070 nether the existent system, according to The 2021 Ageing Report published by the European Commission.

That 2 percent constituent summation is 1 of the highest forecasted changes successful the European Economic Area, beaten lone by Ireland and Norway, wherever the publication to the nationalist pension systems is expected to beryllium 2.6 percent points higher successful 2070, and the Netherlands, wherever the percent of GDP spent connected pensions volition beryllium 2.2 points higher successful 5 decades' time.

Labor shortages and an aging colonisation are contributing to the challenges faced by the German pension system. Dulger suggested status property should beryllium tied to beingness expectancy, saying it "shouldn't beryllium the lawsuit that expanding beingness expectancy leads to longer retirements."

But German Chancellor Olaf Scholz rejected calls to hike the modular status age from 67 to 68 successful June 2021 erstwhile helium was concern minister.

"It's not lone based connected incorrect calculations, it's besides socially unfair," Scholz said astatine the time, arsenic reported by Reuters.

Scholz besides said determination "is nary existent need" to summation the status age, contempt a sheet of governmental economical advisors suggesting the threshold should beryllium pushed to 68 by 2024.

Dulger: Pensions are arsenic superior arsenic clime change

The standard of betterment needed hasn't been seen since the play of German reunification successful the 1990s, according to Dulger, which was erstwhile East and West Germany reunited aft 45 years of separation pursuing World War II.

The West German pension strategy was extended to East Germany, causing years of fiscal upheaval.

Dulger besides said the country's pension strategy should beryllium taken arsenic earnestly arsenic clime change, and suggested it should beryllium included successful societal argumentation forecasts to item the urgency of the situation.

"Reforming the societal information strategy is arsenic challenging arsenic the vigor transition, and without uncertainty arsenic important for intergenerational justice," Dulger told Bild.