Germany plans to raise retirement age to 67

1st December 2006, Comments 0 comments

1 December 2006, Berlin (dpa) - Labour Minister Franz Muentefering Thursday defended Germany's decision to raise the retirement age from 65 to 67, calling it the best way to rein in spiralling pension costs. Muentefering told parliament that making people work two years longer would help the government tackle the problem of population ageing and provide more security for future generations. The move, which needs approval by parliament, was passed by the cabinet late Wednesday as part of Chancellor Angela M

1 December 2006

Berlin (dpa) - Labour Minister Franz Muentefering Thursday defended Germany's decision to raise the retirement age from 65 to 67, calling it the best way to rein in spiralling pension costs.

Muentefering told parliament that making people work two years longer would help the government tackle the problem of population ageing and provide more security for future generations.

The move, which needs approval by parliament, was passed by the cabinet late Wednesday as part of Chancellor Angela Merkel's reform programme that includes revamping health care and the labour market.

Opposition Left party leader Oskar Lafontaine criticized the plans, saying they would not contribute to solving Germany's problems but increase unemployment and poverty among the elderly.

Welfare groups also condemned the move, while the German Trades Union Federation DGB urged the government to shelve the project, which it claimed was asking too much from workers.

Under the government's plans, Germans born in 1964 or later would have to work until they are 67 before claiming state retirement benefits.

For those born between 1947-1963, a phased increase would take place from 2012 onwards with the target age of 67 reached by 2029. People who work 45 years will still be able to retire at 65.

Germany has one of the lowest birth rates in Europe, which experts say will lead to a steadily shrinking workforce and an ageing population.

Germans are also living longer, according to statistics that estimate people who are aged 65 in 2050 will live 4.5 years longer than those at the same age today.

The government hopes that by keeping people in jobs longer, it will reduce the burden on the state pension fund when Germany's demographic transition starts to become acute from 2010.

To cushion the effect of the pension age increase, the cabinet also approved a series of measures aimed at boosting employment among the over 50s, only about 45 per cent of whom have jobs.

The package, called Initiative 50plus, envisages subsidies for companies that retrain older workers. Muentefering hopes the scheme will lead to the creation of 100,000 new jobs.

DPA

Subject: German news

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