SPD Leader Contemplates Possible Rise in Moderate Retirement Age - Proposed Directive from the Commission Regarding Harmonized Cybersecurity Rules and Response Measures Across the EU
The German cabinet is set to approve a bill on Wednesday that aims to raise the pension level and stabilize the retirement system. According to the bill, the proposed pension level will be 48 percent of the current average wage.
This move is in response to concerns raised by German Finance Minister Olaf Schwerdtner, who emphasized the need for pension level stabilization. Schwerdtner suggested an increase in the pension level, stating that many people who have worked for 40 years or more would currently receive only half of their salary as a pension.
The bill also plans to set the pension level by 2031 and make it relative to the current average wage. To finance this increase, the contribution assessment ceiling would need to be raised.
Everyone, including freelancers, solo self-employed, and members of parliament, could contribute to the pension under the proposed plan. This is a significant shift, as freelancers and self-employed individuals often participate in pension systems voluntarily or through separate schemes depending on the country.
The proposed changes align with global trends in pension reform, which focus on fairness, inclusion, and sustainability. Countries like Lithuania are reconsidering past reforms to make pension contributions more equitable, while Chile and South Korea are making adjustments to align pension contributions with total compensation.
It's worth noting that pension levels vary widely across countries, with some of the highest annual retirement payouts per retiree exceeding €30,000 in countries like Iceland, Luxembourg, and Norway. These high pension levels are typically funded by strong compulsory saving schemes and robust fiscal revenues.
In contrast, countries like Denmark, Switzerland, Austria, and the Netherlands offer high pensions supported by universal basic pensions combined with mandatory occupational pensions. These countries manage to keep pension spending under 9% of GDP, below the EU average of around 12.2%.
Retirees can also benefit from tailored tax regimes in many countries, with 61% of the countries studied offering tax benefits on pensions. Some countries cater to low-cost living retirees with minimum pension requirements for visa eligibility, such as Malaysia, Bulgaria, Panama, Mexico, Thailand, Greece, and Cyprus.
In summary, the German government's proposed bill aims to raise the pension level, make it more equitable, and ensure its sustainability. This move aligns with global trends in pension reform and reflects a growing emphasis on fairness and inclusion in retirement systems worldwide.
- The Commission, following this German proposal, could consider similar measures in finance, business, and politics to improve pension conditions, aiming for greater fairness, inclusion, and sustainability in general-news regarding retirement systems.
- With the German bill set to raise the pension level, politicians, freelancers, and self-employed individuals might find themselves discussing the pension issue in the context of its impact on their own business and financial affairs, possibly instigating political debate around the topic.
