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Pension payments policy failing: expert

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Pension payments policy failing: expert
Photo: DPA
11:42 CET+01:00
As the government tinkers with the amount of pension contributions and payouts, the leader of the Parity Association said on Tuesday that the current system has already failed.

The Parity Association, a social justice group, argues that pensions should be at least half of the average salary in order to avoid further increases in poverty among seniors.

 "For too many years, the strategy has been to maintain a stable contribution rate under all circumstances," association chief Ulrich Schneider said in Berlin. "This strategy has failed."

There are currently 20.5 million pensioners in Germany, but the population is aging faster than previously thought, the Frankfurter Allgemeine reported on Monday

A study by a University of Cologne professor predicts that half of Germans will be over the age of 51 by the year 2060.

A study, by a University of Cologne professor, also predicts that there will be 3.3 million pensioners over the age of 90 by that year.

And just 36 million people will be active in the labour force, compared with 50 million today.

In July, pensions went up 1.67 percent for those in western states and 2.53 percent for seniors in the former East Germany.  

Meanwhile, the German workforce will see a 0.2 percent drop in the mandatory pension contributions deducted from their pay cheques as of January 1, 2015, in response to the slowing European economy.

"We need to get away from the policy of holding pension contributions stable into a policy of ensuring quality of life," Schneider said, noting that by 2020, early childhood educators and healthcare workers have "no chance" to earn a pension that will keep them above the poverty line.

"At the moment, we are facing an avalanche of seniors in poverty," he said. 

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