Two nights ago, via ZDF's (Channel 2, public TV in Germany) late talk-show....there came this discussion with the head of the government's Minister of Labor (Heil, SPD) and a young guy who felt the government's pension program was....well...crap (he more or less said that he didn't expect there to be much of a pension program by the time he retired....he was in his early 20s).
This started up an intensive argument.
Heil (the older and more wiser guy in this talk) pointed out that a lot of what was discussed came from a very recent article from the Handlesblatt (a finance - business newspaper in Germany), and the hype of the article was to push younger people to find alternate investments (like Americans would use mutual funds). This would lead you to have a second retirement fund.
The younger guy didn't appreciate the push-back and just wanted Heil to admit the current pension program was screwed-up.
So, here is the blunt side of this whole pension chatter....for over a hundred years (going back to 1889), Germany has run a pay-as-you-go retirement system. Presently, between you and your company.....you are contributing around 18.9-percent of your salary....half and half split between the two of you.
If you really didn't make that much for the first twenty years, you won't have that much to really 'play' with as you get up to retirement age. Adding to this mess....retirement age has shifted (age 65-plus nine months). Eventually, by 2029, it'll be age 67. Recently, there's been chatter that retirement age might even shift up to 68.....all of this because the 'bucket' simply doesn't have the funding to carry the number of people.
How many young people have a grasp of this in Germany? Maybe twenty years ago, it didn't matter....but today I'd say two out of three young people between twenty and thirty know the situation and can talk on this without any problems. They aren't happy or enchanted with the government program.
But changing this? Well...you'd have to contribute more into the system....meaning salaries would have to go up and that 18.9-percent would probably have to bump up at least one-percentage point. This would mean less money in your pocket now.
Fixing or resolving this? Other than starting a secondary investment account (like a mutual fund contribution)....there's no four-star fix.
No comments:
Post a Comment