Working Longer: The Pension at 70 - A Growing Global Trend?
Will the retirement age of 70 make a comeback in the near future? - Will the retirement pension at 70 be reinstated in the near future?
In the spirit of digging deeper, we'll take a trip down memory lane. The concept of retiring at 70? Oh, we've been there before, mates. Back in Germany, in the 19th century, thanks to Chancellor Otto von Bismarck, that was the retirement age for the statutory pension insurance. Although the benefits weren't lavish, and many didn't manage to reach the big 7-0 in those days, it marked a significant social and political achievement.
Fast forward to the present, and the notion of working 'til 70? Not everyone's excited about it, especially when the legal retirement age is currently 67. Some individuals, known as long-term or "particularly long-term insured" may even retire at 63. But rest assured, no one's forced to work 'til they're 70 unless they fancy a supplementary income.
The chatter about raising the retirement age has been ongoing for years, with demographic shifts threatening the pension fund in two ways. First, increased lifespan means longer pension duration, second, the arrival of massive birth cohorts retiring will strain the system, leaving fewer contributors and more recipients.
Who's Got the Energy for 70?
Currently, the retirement age climbs a month for each birth cohort retiring, with the 1964 cohort set to retire at 67 in 2031, making it the pension at 65 become the pension at 67, decision made in 2007.
Experts see a potential solution in raising the retirement age even further, up to 69 or 70, but the idea faces resistance, notably from trade unions, who argue that many people, especially those in demanding jobs, can't manage working that long.
So, is raising the retirement age inevitable? Not necessarily, and there are alternatives, but each comes with its own headaches. Reducing pension levels, cuts to early retirement, increased tax subsidies, or introducing a state-owned stock pension could all help, but at a cost.
Workfare World Tour
Historically, most countries have not traditionally offered pensions at 70. However, the idea is gaining traction due to increased life expectancy and economic pressures. Let's check out what's happening elsewhere:
Stateside: That's Right, United States
In the U.S, Social Security sets the full retirement age at 67, but discussions abound about potentially upping it to 70 due to demographic changes and financial sustainability concerns. Back in 1935, when the system kicked off, retirement was set at 65.
Land of the Rising Sun: Japan
Japan is renowned for its elderly workforce, with many continuing to work beyond 70, thanks to cultural norms and economic necessity.
Danish Delight: Flexibility in Retirement
Denmark allows individuals to retire between 62 and 67, but boasts a high participation rate among older workers, with some choosing to work past 70.
Netherlands and Canada: Smart Pension Planning
The Netherlands and Canada have pension systems that tweak the retirement age according to life expectancy, ensuring sustainability as lifespans increase. Canada also maintains a robust pension system, focusing on financial sustainability and adaptability to demographic changes.
The Future's Bright (and Long)
As populations age and life expectancy rises, countries worldwide are adapting their pension systems to stay afloat. This adjustment often involves increasing the retirement age or encouraging continued workforce participation through flexible arrangements.
- The concept of working beyond 70 was first introduced in Germany in 1889, as the retirement age for the statutory pension insurance, which can be traced back to Chancellor Otto von Bismarck's community policy.
- Despite the widespread discussion about raising the retirement age, some like trade unions argue that the specter of working until 70 leads to hardships, especially for individuals in demanding jobs.
- In the Altersgrenzenanpassungsgesetz (Adjustment of Retirement Age Act) of 2007, the retirement age in Germany was increased from 65 to 67 for the cohorts retiring from 2031, transforming the pension at 65 into the pension at 67.
