More Germans could find themselves at risk of poverty in later life, according to a study of projected income levels. Plans for a basic pension for those in the most need could prove ineffective, the authors said.
More than one in five pensioners in Germany could find themselves threatened by poverty in two decades time, according to a study by the German Institute for Economic Research (DIW).
The study found that the number of pensioners facing a risk of poverty by 2039 could rise from 16.8% at current levels to 21.6%.
Authors of the investigation, released Thursday by the Germany-based Bertelsmann Foundation, said they expected an improvement in the employment market over the next 20 years. However, they added, certain groups — such as the long-term unemployed, single people and those with low qualifications — were less likely to benefit.
“Even with positive developments in the labor market, we have to be ready for a significant increase in poverty among the elderly in the next 20 years,” said study lead author Christof Schiller.
Individuals at risk of falling into poverty were defined as those receiving less than 60% of the average income. According to the study, this equated to an income of less than €905 ($997) per month.
The authors also predicted the proportion of recipients who depend on the state for additional subsistence costs could rise from 9% to almost 12%. Individuals receiving such help would have incomes of less than €777 per month.
A current plan to introduce a basic pension by Germany’s coalition government — aimed at keeping pensioners with lifelong low incomes out of poverty — would do little to help, according to the study’s authors. The problem with the plan, the report found, was that too few people would meet the requirement of having accrued 35 years of contributions from working, child-rearing, or looking after relatives.
Instead, the study recommends a less stringent system involving a “simple income test and a somewhat more flexible interpretation of insurance periods.”
For the study, representative data from the DIW for some 30,000 people was used to simulate future income levels.
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