According to current forecasts, demographic change is less of a burden on pension funds than previously thought. The German pension insurance presented figures on Friday in Berlin. This is good news, however, only in purely monetary terms. The background is, among other things, that the life expectancy of the population is increasing less than previously assumed.
In purely mathematical terms, there were 34.8 people of retirement age in 2020 for every 100 people of working age. For comparison: in 1990 it was 23.9. So this number has been steadily increasing over the decades. So far, the pension insurance had expected that in 2060 there would be 50 to 55 people of retirement age. However, the current forecast only assumes a mathematical figure of just under 45.
What lies ahead is no greater than what we have accomplished in the past.
Reinhold Thiedehead of the research and development department of the German pension insurance
This means that spending on pensions will be lower than expected. This calculation is based on the population projection of the Federal Statistical Office. Added to this is the gradual increase in the standard retirement age as a factor relieving the burden on the pension fund.
The current prognosis for life expectancy
Life expectancy for newborn boys is currently 78.5 years. In 2015 it was still expected that this value would increase to 86.7 years by 2060. Currently, however, the corresponding prognosis is only 83.4 years.
Life expectancy for newborn girls is currently 83.4 years. In 2015, it was assumed that this value would increase to 90.4 years by 2060. But currently the prognosis is only 87.2 years.
But none of this changes the fundamental phenomenon that demographic change towards an older society is a challenge for pensions. “We have an increase in burdens ahead of us due to demographic change, in particular due to the baby boomers entering retirement,” said Reinhold Thiede, head of the research and development department of the German pension insurance. “But what lies ahead is no greater than what we’ve accomplished in the past.”
