The Bundesbank Screams: Ay, Get Rid of That Early Retirement Without P pockets Lightening!
Bundesbank advocates halting the growth of non-tax-deductible pensions.
Listen up, folks! The Bundesbank ain't happy with the current retirement system. In their latest report (released in June - who's keeping track?), they've taken a swipe at the early retirement system, dubbed "retirement at 63". This system allows you to wave goodbye to the rat race early, but as it turns out, the Bundesbank sees it as a problem.
The system offers you either no deductions or just a tiny bit of 'em. But according to the Bundesbank, it's high time these deductions went the way of the dodo. They argue that the government should link the statutory retirement age (post 2031) and the earliest possible retirement age to life expectancy. That's right, you read that correctly. No more early retirement without lightening your pockets!
The government's plan for an "active pension" ain't cutting it for the Bundesbank either. This plan offers folks who continue working after reaching the statutory retirement age a nice, tax-free income up to €2,000 monthly. But the Bundesbank knows it's not the cash that keeps people working – it's the enjoyment of the job or the social aspects. Financial incentives, they reckon, are a waste.
The Bundesbank on a Recalculating Spree
But that's not all. The Bundesbank also thinks the current deductions for early retirement are too stingy, making early retirement look appealin' as heck to folks. And guess who ends up footing the bill? Yep, you guessed it – the statutory pension insurance. The Bundesbank says the slight 0.3% monthly deductions make early retirement too attractive and cause financial difficulties for the pension system.
On the other side of the coin, monthly supplements for those who delay their retirement are said to be a bit too generous, based on the Fed's calculations. And here's the kicker – the deductions and supplements are not tied to the exact retirement date. That's wrong, according to the Bundesbank.
Graduated Deductions, Anyone?
The Bundesbank suggests implementing graduated deductions and supplements that depend on the distance between the retirement age and the statutory retirement age. For example, if you retire at 63 (the early retirement age), you'd owe a hefty 0.37% monthly deduction. But if you hang in there till 67 (the statutory retirement age), the monthly deduction would increase to 0.42%.
To make things "systematically fair", the Bundesbank recommends periodically reviewing and adjusting the deductions and supplements every 5 years or when new population projections from the Federal Statistical Office become available.
In the end, the Bundesbank is calling for a radical overhaul of the retirement system, aiming to ensure it doesn't collapse under the weight of a cash-grabbing early retirement system. If you're keepin' score, this means no more sweet early retirement deals, folks!
- The Bundesbank suggests the government should link the statutory retirement age and the earliest possible retirement age to life expectancy, to discourage early retirement and prevent financial difficulties for the pension system.
- The Bundesbank proposes implementing graduated deductions and supplements that depend on the distance between the retirement age and the statutory retirement age, to ensure a systematically fair distribution of financial responsibilities.
