Anti-rentner rant

107 posts in this topic

It's an actuarial nightmare to develop pension payments in a case where funding is also a bit dependent on a fickle sources such as inheritance taxes which are subject to a lot of tax avoidance and the unknowable levels of future asset prices. You are correct in suggesting that the most likely fix is higher payments and lower benefits.

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You make a good point, Conquistador, and I hadn't considered it from an actuarial point of view but more just as a stop-gap measure to give the system a few more years. And after all, that money must be going somewhere now? Or alternatively, the government must have a fairly good idea of the median amount that they get each year - so maybe just a fixed sum derived from inheritance taxes could be injected. The amount that premiums would have to be raised to meet the system on that basis alone would be pretty significant.

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I agree. What people often fail to realise is that we've only 'had it so good' since about the 1950s. Hell, there was still food rationing in the UK in the early 50s!! But in the last fifty or so years, our lifestyles have increased immeasurably and all of a sudden what were luxuries are now seen as entitlements. Meat every day, foreign holidays, brand new cars (my dad was in his 40s before he could afford a brand new car), kitchen gadgets etc., etc.

 

When I was a child, most people retired and then keeled over less than five years after they had retired. Now... you can be retired for 30 years - especially if you take early retirement. Where is the money coming from for periods of retirement that have become vastly extended than they were when the pension system first started? In the past, you had to pay contributions for 40 years to get a full state pension. Now, you have to only pay for 30 years. I understand that this is so that women who take time off for childcare or taking care of other relatives get a full pension. But how can one really justify cutting the contribution time by 10 years? Crazy.

 

Then there is the health system. People are living long because medicine and surgery have improved. But because they live longer, they need more care. Can the health system pay for all the people that are living long and all the new medicines and medical procedures that have been invented since the health system was first established? Where is the money to come from? Some people have never been employed, never paid into the health system and are still entitled to all the medical care anyone else is? How can this carry on? I'm not saying that we should let people die by the wayside - but I just wonder how much care can be given to a growing population when there is not a growing workforce in paid work.

 

So I do understand the original poster's concerns about how the people older than us seem to be sucking the system dry.

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It's a growing problem everywhere - not just in Germany - that national pension/social security systems seem destined to collapse if they continue business-as-usual.

 

Trouble is, numerous (or vocal) people just want to ignore this - witness the SPD & allies who want to go back to retirement at 65 without any consequences. Anyone remember the end of the Kohl-era when Schröder danced around saying if he got elected he'd reverse pension reductions - he did & not so long afterwards re-introduced them at a more stringent level. But the public have short memories.

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Anyway, as we were standing there, I watched all these big black Mercedes pull up, and rich well-atired OLD FOGIES get out and saunter in.., with an overpowering air of entitlement about them. Just their gait made it clear: "this is THEIR country".

At the Leipziger Gewandhaus you will see exactly these kind of pensioners: well-off "Bildungsbürger" who were once in well-paid, highly-regarded jobs and still profit from their previous privileges.

 

But they're not representative. The majority of pensioners were not in privileged positions during their working life and they have noticeably less money in their pockets once they retire.

 

At the lower end are those never managed to earn a reasonable wage and who end up in poverty.

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You make a good point, Conquistador, and I hadn't considered it from an actuarial point of view but more just as a stop-gap measure to give the system a few more years. And after all, that money must be going somewhere now? Or alternatively, the government must have a fairly good idea of the median amount that they get each year - so maybe just a fixed sum derived from inheritance taxes could be injected. The amount that premiums would have to be raised to meet the system on that basis alone would be pretty significant.

 

I have a hard time believing that the revenue from inheritance taxes is relatively predictable or very lucrative, but maybe someone more familiar with it can comment on that. Another thing to consider is where the revenue from inheritance taxes currently goes- if it goes to general funds you'd just be shifting it to another pocket and would have to make up that revenue anyway.

 

Premiums are going up no matter what but perhaps the best way to forestall the rise somewhat over time would be to set up one Kasse and require everyone to pay into the public system, at least up to a certain income level (including non-wage income), and anyone wanting private insurance in addition could purchase it separately. Surely there are other potential cost cuts as well, but this seems to be the best, most significant potential one.

 

EDIT: Tax Revenue in Germany shows how much was collected the past few years, although from what I understand inheritence tax law was reformed in 2009 so a direct comparison to past years may not be accurate. Looks like it amounted to 4.4 billion euros in 2010.

 

Apparently, the administrative costs of public insurers in 2009 amounted to 8.9 billion euros, and total expenditures were 160.9 billion euros (see Public Insurance in Germany). Also note how the premiums as a percentage of wages have risen over time.

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Youth is wasted on the young.

 

Almost OT : Was that a deliberate quote? You forced me to go http://www.toytowngermany.com/forum/index.php?showtopic=241410&st=75 listen to Silent Scream. I'd post a youtube video but the confounded GEMA won't let me find one. It'll have to be lyrics instead, especially as they fit the topic in a way...

 

http://www.sing365.com/music/lyric.nsf/Silent-Scream-lyrics-Richard-Marx/C4AA16093E42ADD548256BD500041E1F

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