The German pension system is in severe demographic crisis combined with a pay-as-you-go (PAYG) structure that is extremely vulnerable to an aging and shrinking population.
Just for the record....Germany has one of the lowest fertility rates in Europe (currently ~1.3–1.4 children per woman).
In 1990 there were about 4 workers per retiree. Today it’s roughly 2.3, and by 2040–2050 it is projected to fall lower....to roughly 1.5 or even 1.3 workers per pensioner (this came from the Statistisches Bundesamt and EU Ageing Report 2024).
The current Pay-As-You-Go System? Almost the entire public pension (Gesetzliche Rentenversicherung) is financed by current workers’ contributions (18.6-percent of gross wage, split 50/50 between employee and employer).
There is already in some form....a count-down-calendar....where the contributor-to-retiree ratio collapses. That means that contributions must rise dramatically, or that pensions have to be cut, or that the federal budget (taxes) must subsidize the gap.
So, in some fashion....all three have started in some minor form.
Political fixes? Well....raising the retirement age beyond the current gradual increase to 67 (and possibly to 68–70 in the future) apparently doesn't sell well.
Going to private or occupational pensions? Some Germans would buy into this idea. But only about half of workers have any meaningful supplementary coverage, and even then the amounts are modest (figure roughly 2,000 to 3,000 Euro a year....on top of your current pension).
Yeah.....Germany built a generous pension system for a young, growing population in the 1960s–1980s. But that population no longer exists.
Most experts agree the current model is unsustainable after 2030 without either drastic contribution/tax increases or significant benefit cuts.
I should add here....lot of younger Germans complaining that fixes seem to revolve around them taking up the burden of thing.
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