The German Federal Bank (Bundesbank) said in its monthly report on Monday that by 2060 Germany should increase the retirement age to 69 from the current 65.
The retirement age is already set to reach 67 by 2030, but the Bundesbank said that even with the current favourable financial situation and this increase, “further adjustments are inevitable”.
“At the same time, a longer working life will not be taboo,” said the report.
Because Germans are now living longer and having fewer children, the current system will not be enough to meet targets. Once the baby-boomers have all retired, there will be fewer new workers to fill the gaps and thus fewer contributors into the system – especially since Germany has been seeing lower birth rates in recent years.
A longer working life should be able to stabilize pension levels so that retirees would receive 44 percent of their average salary: maintaining the current plan could see pension levels fall to just over 40 percent.
The report predicted that by 2030, workers would be making pensions contributions for 49 years – the current limit is 45 years.
But the Bundesbank also said that workers by 2060 will be paying significantly more in pension contributions once all baby-boomers retire: the current 18.7 percent of wages will rise to just under 24 percent.
But the federal government is not convinced about an even higher retirement age.
Chancellor Angela Merkel's head spokesman Steffen Seibert said on Monday that “the government stands by retirement at 67”.
“There are always discussions and sometimes the Bundesbank is a part of these discussions,” but the current government's policies stand by 67 as a retirement age.