More pensioners working low-paid jobs to get by

An increasing number of German pensioners are being forced to work low-paid mini-jobs or apply for special supplemental aid from the government in order to make ends meet, statistics show.

More pensioners working low-paid jobs to get by
Photo: DPA

According to statistics from the Federal Ministry of Labour and Social Affairs provided to the Saarbrücker Zeitung, roughly 660,000 people between 65 and 74-years-old had to work low-paid jobs to supplement pensions in 2010, representing 3.9 percent of the population in that age group. That’s compared to 2000 when 416,000 had to work – or about 3 percent of retirees.

Pensioners applying for the social security package from the state for low-income seniors also increased – in 2009 some 400,000 applied for it compared to 258,000 in 2003, according to the newspaper.

The government has already announced an increase in the Germany’s retirement age from 65 to 67 beginning in 2012, saying the country has no alternative because society is ageing rapidly and people are living longer. Also, recent statistics show pension benefits have been rising below inflation rates, leading to a drop in the real value of payouts by seven percent in the past decades.

“Retirement was yesterday. Drudgery until death is the fate of more and more pensioners today,” said Matthias Birkwald, a Bundestag member from the socialist Left party, which made the original request for the statistics from the government.

The development appears to be the decreasing value of pension benefits as well as an increasing number of people with poor or low-paying work histories – in Germany, old-age pensions are largely driven by how much money workers earned when they were younger.

Birkwald demanded an end to anything that could lead to cut backs in pensions, to move the retirement age back to where it was and to create minimum payouts for the long-term unemployed or people who had low incomes when they worked.

The Ministry of Labour and Social Affairs said it was starting a special dialogue next year to discuss how to adjust the government-sponsored pensions to deal with the country’s changing realities.

The Local/mdm

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Pensions in the EU: What you need to know if you’re moving country

Have you ever wondered what to do with your private pension plan when moving to another European country?

Pensions in the EU: What you need to know if you're moving country

This question will probably have caused some headaches. Fortunately a new private pension product meant to make things easier should soon become available under a new EU regulation that came into effect this week. 

The new pan-European personal pension product (PEPP) will allow savers to take their private pension with them if they move within the European Union.

EU rules so far allowed the aggregation of state pensions and the possibility to carry across borders occupational pensions, which are paid by employers. But the market of private pensions remained fragmented.

The new product is expected to benefit especially young people, who tend to move more frequently across borders, and the self-employed, who might not be covered by other pension schemes. 

According to a survey conducted in 16 countries by Insurance Europe, the organisation representing insurers in Brussels, 38 percent of Europeans do not save for retirement, with a proportion as high as 60 percent in Finland, 57 percent in Spain, 56 percent in France and 55 percent in Italy. 

The groups least likely to have a pension plan are women (42% versus 34% of men), unemployed people (67%), self-employed and part-time workers in the private sector (38%), divorced and singles (44% and 43% respectively), and 18-35 year olds (40%).

“As a complement to public pensions, PEPP caters for the needs of today’s younger generation and allows people to better plan and make provisions for the future,” EU Commissioner for Financial Services Mairead McGuinness said on March 22nd, when new EU rules came into effect. 

The scheme will also allow savers to sign up to a personal pension plan offered by a provider based in another EU country.

Who can sign up?

Under the EU regulation, anyone can sign up to a pan-European personal pension, regardless of their nationality or employment status. 

The scheme is open to people who are employed part-time or full-time, self-employed, in any form of “modern employment”, unemployed or in education. 

The condition is that they are resident in a country of the European Union, Norway, Iceland or Liechtenstein (the European Economic Area). The PEPP will not be available outside these countries, for instance in Switzerland. 

How does it work?

PEPP providers can offer a maximum of six investment options, including a basic one that is low-risk and safeguards the amount invested. The basic PEPP is the default option. Its fees are capped at 1 percent of the accumulated capital per year.

People who move to another EU country can continue to contribute to the same PEPP. Whenever a consumer changes the country of residence, the provider will open a new sub-account for that country. If the provider cannot offer such option, savers have the right to switch provider free of charge.  

As pension products are taxed differently in each state, the applicable taxation will be that of the country of residence and possible tax incentives will only apply to the relevant sub-account. 

Savers who move residence outside the EU cannot continue saving on their PEPP, but they can resume contributions if they return. They would also need to ask advice about the consequences of the move on the way their savings are taxed. 

Pensions can then be paid out in a different location from where the product was purchased. 

Where to start?

Pan-European personal pension products can be offered by authorised banks, insurance companies, pension funds and wealth management firms. 

They are regulated products that can be sold to consumers only after being approved by supervisory authorities. 

As the legislation came into effect this week, only now eligible providers can submit the application for the authorisation of their products. National authorities have then three months to make a decision. So it will still take some time before PEPPs become available on the market. 

When this will happen, the products and their features will be listed in the public register of the European Insurance and Occupational Pensions Authority (EIOPA). 

For more information: 

This article is published in cooperation with Europe Street News, a news outlet about citizens’ rights in the EU and the UK.