Retirement at 70: Denmark pulls the emergency brake – what does that mean for us?

Retirement at 70: Denmark pulls the emergency brake – what does that mean for us?

The discussion about the retirement age is gaining momentum in Europe, with Denmark being seen as a pioneer. Manager Magazin reports that the country has decided to gradually increase the retirement age to 70 years. This decision is part of a comprehensive reform aimed at addressing the demographic challenge and rising costs in the pension system. The move could serve as a model for other European countries facing similar demographic problems.

There are also great concerns in Germany. Deutschlandfunk reports that 61% of pensioners receive less than 1200 euros net per month. The financial situation is particularly alarming for single people, as one in three receives less than 750 euros net per month. These figures illustrate the financing problems of the statutory pension insurance, which is operated through the pay-as-you-go system, where the current pensions are financed by the contributions of those in employment.

Demographic challenges

One reason for the upcoming reforms is the demographic development in Germany: the birth rate remains low while life expectancy is increasing. This leads to a growing number of pensioners, which puts a heavy burden on the statutory pension insurance funds. Scientific advisors warn of “shockingly increasing financing problems”. The federal government also has to make massive subsidies to the pension fund; Currently it is around 100 billion euros, which accounts for over 25% of the entire federal budget.

Financing pension insurance could lead to increasing new debt in the future. Political discussions revolve around possible increases in pension contributions and the pension level, which must not fall below 48%. Experts are calling for the pension age limit to be raised to 67 without any deductions by 2029, with some even seeking a further increase in the retirement age. This discussion is particularly relevant as the gap between the average retirement age and the statutory retirement age is increasing.

Pension reform in Germany

Current political voices are calling for a comprehensive pension reform in order to include civil servants and the self-employed more closely. The Scientific Advisory Board of the Ministry of Economic Affairs has also advised that the duration of pension benefits should be adjusted to the increasing life expectancy. Given these challenges, a future-oriented reform is urgently needed to prevent poverty in old age. Forecasts show that women with interrupted working histories could be particularly affected by poverty in old age.

The financing problem remains a central topic in the political debate. There is no solution in sight that comprehensively addresses all existing challenges and demographic changes. Given ongoing developments in Denmark, Germany may be forced to consider similar steps to reform the pension system to ensure long-term stability.