The Chief Economist: Pension policy needs more awareness of reality

Pensioner

Germany’s population is aging twice over: on the one hand, birth rates have fallen sharply, on the other hand, life expectancy of individuals continues to rise.

(Photo: dpa)

Germany’s population has been aging for a long time, and particularly rapidly in this and the coming decade. This is not a new finding, but has been well known since the 1980s at the latest.

It was not without reason that an informal grand coalition reacted to this on November 9, 1989, on the evening of which the Berlin Wall unexpectedly fell, with a far-reaching pension reform that came into force in 1992. This was the beginning of a series of reforms aimed primarily at ensuring the financial sustainability of this most important pension system.

The aging of the population is not a surprising shock like a war or a pandemic, but a gradual but clearly foreseeable development that will unfold its full force at the end of this legislative period.

By the next decade at the latest, real growth in the German economy will no longer be a matter of course. Because potential growth is declining, especially since there is a shortage of workers in almost all areas. As a result, there is a risk of a significant welfare loss.

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