Retirement increasingly looks like an auction with dummy bidders because no-one else wants to raise their hand. The German Bundesbank is warning that by 2060, the retirement age should be 69 not the current 67 proposal by 2029. Yes I get that people are living longer but that disguises the fact that the pension pot is emptying too quickly.
Naturally Chancellor Merkel’s team came out suggesting that the Bundesbank was too negative because immigration will help slow down the declining workforce alleviating the need to raise retirement ages again. German elections are to be held in autumn 2017 and Merkel doesn’t need more negative news flow to dent her already flagging popularity.
Merkel’s popularity sunk 12 points after the Munich terrorist attack, the second lowest showing since the start of the current government in 2013. Only 34% said they were satisfied with her handling of the refugee crisis.
Pensions are going to be a huge problem and as I showed with the US, unfunded portions due to the inability to generate significant returns will strangle authorities. They can babble on all they wish over actuarial assumptions, but the reality is that people will be forced to retire with less, despite tipping in more while they have to wait longer. Would anyone voluntarily sign up to that type of situation?
As I wrote on pensioners in Japan, the ramifications for people who discover the safety net they expected is not there, some choose to commit crime to spend life in prison as such a life is preferable to struggling on the outside on a pittance.