Fixing the Unfixable

With my German wife, there are three or four topics of conversation that I tend to avoid because they will get her spinning to the 'ninth' degree and hyped up to a terrible extent.  One of those topics is retirement and pension expectations.  I would generally describe my wife as working-class, and the typical German.....realizing by age thirty-five tha the package promised....won't really meet expectations and having to collect money on the side to invest and hope for a secondary pension existing (something that maybe half of all Germans simply don't have).

Today, via Focus (the German news magazine) came to discuss this topic, and I've carefully avoiding saying anything about their report to my wife.

Right now, as you tend to expect from coalition government.....the pension program is 'broke' and needs repair.  You can discuss the history part of this, with the past dozen-odd coalitions, and it's a continual thing.....attempting to repair something that is apparently unfixable.

The current suggested fix?  Focus brought in a pension expert.....Axel Börsch-Supan.....to talk over the plan.

The expert says, if implemented....then the younger generation of Germans would have to pay consequences down the line.  He suggested that working to age 69.....might be required, along with higher taxes, and more pension contributions.  All of this, in his estimate.....meant an additional eleven billion Euro (by 2025), which would grow yearly and amount to 180 billion Euro in forty years (annually collected).

How to raise taxes?  Well....he talks about the VAT (currently at 19-percent).....the sales tax here in Germany.....perhaps going up by 3-points (at the starting point) and going to 28-percent by 2060.  To suggest this to most Germans and they'd go ballistic. 

Another possibility is to raise the retirement age.....to age 72....which would also freak out Germans.

Then he suggested the annual contribution for pensions going to nearly 28-percent. 

So, is the pension program really that screwed up?  What you have are a growing number of bottom-level workers who did their mandated contribution....with the low salary structure, and waking up around age sixty to realize the monthly pay-out at sixty-six....won't be enough to cover basic expenses....in effect, they will have to seek welfare funding on top of their pension, to survive.

I sat and watched a news piece about ten years ago.  Older German guy (probably near 68) and his wife....discovering that his warehouse job barely paid enough for regular living, and the pension paid roughly 550 Euro a month.  By the time, he figured his rent, the heat, and electrical....he'd maxed out the pension and had around 80 Euro to buy food for the month.  He had no choice.....apply for supplemental welfare to survive. 

This group is expanding and more folks are waking up in their fifties to realize there just isn't enough money in the pension fund to much of anything except marginal living. 

A problem with salary structure and containment over the past twenty years?  Yes.  Most would suggest that.  But for the Bundestag to repair this without addressing the salary structure and taxation problems?  That's part of the problem as well. 

In any conversation with my German wife.....to suggest she might have to work to age 72?  It's best not to bring up this subject.