[A-List] Germany: pensions reform

["Michael Keaney" <michael.keaney@xxxxxx>]

I plan to put something a bit more coherent together on this, along lines of
the discussion with John Gulick on the German crisis, but for now it's worth
simply following the unfolding saga of Schröder, like Callaghan before him,
trying to hold together his coalition of monopoly capitalists and trade
union bureaucrats at a time of economic contraction.


Berlin expert pushes radical pension reform
By Haig Simonian in Berlin
Financial Times; Nov 14, 2002

The head of Germany's new commission on reforming the welfare state called
yesterday for radical changes to the overstretched state pensions system, as
the only way to finance the burden of an ageing population and declining
birth rate.

Bert Rürup, the economics and pensions expert named this week to lead the
commission, admitted that the pensions reform of 2000 had been sensible but
he saw it as flawed by over-optimistic assumptions on employment growth.

In his first comments on the task ahead, Mr Rürup said further action was
inevitable, whether through changes to state pensions or extensions to the
supplementary private cover introduced as one of the reforms of Chancellor
Gerhard Schröder's previous government. "I don't think we'll be able to
avoid, one way or the other, raising the pensionable age," he said at a news
conference yesterday.

Stressing the need to give future pensioners financial certainty and allow
them to plan for retirement, he added: "I think it would be a brave step to
say today that from 2011, the pensionable age will be pushed back by a month
a year," he said.

The suggestion reflects proposals by two leading business federations for a
gradual increase in the pensionable age to 67 from 65 from 2010.

Mr Rü rup's remarks reflect the focus in Germany on the likelihood of
further reforms to relieve the financial burden on the state pensions system
and counter a trend towards ever earlier retirement.

The average retirement age in Germany is 60.5. That is appreciably younger
than in Sweden (63.3) or Britain (62.7), the two European Union countries
with the oldest average retirement ages, but ahead of France, where people
retire on average at 59.2.

The comments by Mr Rürup, a former civil servant and economics professor who
is a member of the chancellor's Social Democratic party, suggest the
commission, which has been dismissed by many observers as a sop to the
economically liberal Greens, the junior coalition partner, may be more
radical than expected. The commission, due to report next autumn, was put
forward this month as a face-saving solution to guarantee Greens' support
for higher rises than expected in state pension premiums.

The economically liberal Greens insisted on written agreement with the SPD
on the establishment and remit of the commission as the price for
reluctantly accepting the pensions contribution increase.

The other members of the group, being constituted under the auspices of Ulla
Schmidt, the SPD health and social services minister, are expected to be
named next week.