Retirement in Europe: How long do we have to work?
On 22 May, the Danish Parliament passed the law, increasing the age of retirement. The law approved by 81 MPs with 21 voting determines the age of retirement at 70 for all citizens born after 31 December, 1970. Currently, the retirement age in Denmark is 67. By 2030, it will increase to 68, and from 2035 to 69.Last year, 47 -year -old Social Democratic Prime Minister Mette Frederricasen said that after reaching 70 official retirement age, it would be open to review the system.International comparison shows how the age of different retirement is regulated. In some countries, people continue to work longer than being legally necessary.
Will Germany follow Denmark’s leadership?
The new government of Germany is still trying to find out how to deal with the country’s struggling statutory pension system.Recently, at a party conference in the ruling Christian Democratic Union (CDU) in Stutgart, the new Chancellor of Germany, Frederick Merz praised himself and their social democratic coalition partner for “Wrote many good things in the coalition agreement – Hau to noise of the finance of the finance of the chronic underfinance pension system, however, however, however.Merz warned that “the way things are today, it can last for a few more years.”For a former Government Economic Advisor, Burn Rafalehschen, Danish improvement effort is worth imitating.The economist said, “We should increase the retirement age quickly to 70 so that we can still catch the minimum part of the baby boomer generation,” august Recently, the newspaper, referring to a large group of people born in the late 1950s and early 60s, who are currently retiring in large numbers.Raffelhüschen said that because 1 million Germans would leave the workforce by 2035 every year, it would push more pension contribution to younger generations.
Bearridge vs. Bismarck
Pension financing in Europe follows two main models in the name of his founders: Bismarck models based on social laws introduced by German Chancellor Otto von Bismarck in the 19th century, and developed Beverly models developed in the 1940s.The Bearridge System is a welfare model that provides universal coverage and is taxed. It was prepared by British economist William Henry Beverridge, a member UK Parliamentary faction of liberals.On the other hand, Bismarck model is an insurance-based system in which both workers and employers pay in a fund. In simplified terms, it is a so-called pay-e-bo-Go system where the working population funds the pension of retired people through their contribution.This is why it is difficult to compare pension systems throughout Europe – and more use hybrid models connecting aspects of both countries. The nuances, often complicated, vary widely among nations.
Development of demographics, and prolonged working – or less
Germany’s Bismarck-based system is growing rapidly due to demographic changes. As the age and workforce of the population shrink, there are more retired and fewer people to fund social insurance schemes.At the same time, people have been living for a long time due to growing life expectancy, which means they draw pension for more years.It puts the growing pressure on the pay-e-u-Go pension funds, with the result that either the contribution should continue to grow, or the pension benefits may be stable, failed to maintain with inflation. Alternatively, overall pension levels may have to be demolishedOf course, a small working life and earlier retirement is appealing to most people because they can leave work before the decline in their physical abilities and use the last third of their life for meaningful activities or for more time with family.There are also economic benefits, because more leisure time creates more opportunities to spend money, thus consumer stimulates demand and comprehensive economy.But working for a long time can also have benefits. Many people feel fit and well engaged in their 60s to continue working, pass on their knowledge, and have a value interaction with young colleagues.Employers benefit from maintaining experienced employees and established routines, which can also help reduce the lack of efficient labor in Germany.
Retiring a personal decision
Looking at international data shows that the age of legal retirement rarely is align when people actually stop working. In most cases, people first become retired because their bodies cannot live in burnout, or creative businesses.In some countries such as New Zealand, Japan, Sweden or Greece, people often work beyond official retirement age. Whether they voluntarily do this, this is not clear. The reasons are often very individual to occupy by data. ,The so-called gross replacement rates play a major role in the decisions of the pension benefits for the rate-final salary. If that difference is very wide, some workers cannot retire.The risk of old age poverty may be reduced if pension was sufficient to provide financial security after a long career. But this will require funds that the pension system currently lacks. On the other hand, increasing the level of contribution will limit the ability of the workers to save privately for retirement.
