“Germany is right at the back internationally in terms of retirement security for low-earners,” said Monika Queisser, head of the OECD’s section on social policy in an interview with Die Welt newspaper.
“The strict connection between contributions and service, results in people who have worked for their whole lives and have only had a low income being in danger of poverty in their old age.”
She said those people who had gaps in their working lives due to unemployment or due to raising a family were particularly at risk of ending up poor when they got old. A further problem was the limited number of people paying into pension schemes – in Germany only those with jobs are included, leaving many self-employed people either insufficiently covered or without any pension plan at all.
“Old-age poverty is not yet so widespread, but it will increase markedly if one does not take precautions now,” she said. She praised the fact that discussions are planned for this week, involving Labour Minister Ursula von der Leyen, trades unions and associations as well as social policy experts. A conference is set to start on Wednesday.
Yet Die Welt reported that von der Leyen does not intend to offer much change – the paper said on Tuesday that she had already completed her concept for a small pensions reform, which would not involve significant increases to low pensions.
Only those who have made at least 45 years of pensions contributions and yet still do not have enough income to clear a basic level, would be granted a top-up payment.
Other tweaks should make things slightly more comfortable in the light of the statutory retirement age being raised to 67, but the cost of the changes has been capped to €2 billion, said von der Leyen.
Opposition politicians have accused her of not taking the dangers seriously.
Other countries such as Denmark and Holland shared around pension provision much more than Germany, said Queisser, while New Zealand guarantees all pensioners a state-funded payment of 40 percent of the average wage, which is granted to everyone, regardless of other income.
She said Germany could manage to improve its situation, praising the fact that over the last few years private options have been made more attractive to those on lower wages.