Pension crisis in Germany – what happens next? | Focus on Europe

The problem is, and all politicians know this, as do the experts, that if we keep going like this, we're going to hit a wall.

More and more young people growing up in Germany worry they won't receive enough pension when they retire.

You can chuck retirement in the trash, useless.

We won't get a pension.

I think it's a topic that scares us.

Not even today's pensioners have enough to get by.

I can forget taking a vacation, anything over 1,000 euros is out of the question.

The government wants to take action and has announced pension reform.

Can Germany's pension system be saved?

Arthur wants to help shape the future of retirement in Germany.

The 23-year-old student lives in Berlin and is a member of the Foundation for the Rights of Future Generations, an organization that fights to ensure a secure future for tomorrow's generations.

When it comes to the pension system, no matter how dull it may sound, at the end of the day it's absolutely relevant and impacts everyone.

Arthur and other young campaigners agree that Germany's retirement system needs to be fit for the future. They worry that the views of young people in Germany aren't being taken into account.

Whether over the short or the long term, it will affect us all.

It already affects my grandmother.

It'll affect me in about 40 years, roundabout. We already see the buck being passed on to younger generations, especially when it comes to the pension system, and if we don't raise our voices, then I don't think many people will.

But what's wrong with the current system?

Let's take a closer look.

State-subsidized pensions in Germany date back to the 19th century, when they were adopted as a way to ward off poverty in old age.

To this day, it is based on an intergenerational contract.

Each month, today's workers contribute a portion of their salaries to finance today's pensions.

The problem is, German society is aging.

In the 1960s, there were about six workers for each pensioner.

Today, that ratio is less than two to one.

The burden on younger generations is growing heavier.

That's why the federal government is planning a grand reform.

A commission has proposed more than 30 ideas on how to make the future pension system fairer.

One idea is to set aside a portion of pension contributions to create a state pension fund for stock market investments.

Or the retirement age could be adjusted according to life expectancy and increase over time.

The current retirement age is 67.

And more people will be asked to contribute, including self-employed workers or other professional groups that have been exempt until now.

But these proposals still need to be implemented politically.

All elements of this reform package must be implemented expeditiously.

We cannot allow ourselves to exclude or reject individual measures.

Peter Hahn, a professor for public and labor economics, views the commission's proposals favorably.

Under one condition: they must all be fully implemented.

But he would also have wanted to see more measures to relieve younger generations.

The proposals look like the younger generation might bear more of the brunt, and the older generation, today's pensioners, not as much.

This is where they could have considered asking people with high retirement incomes to pay more, which could help stabilize the system.

The system's current instability is not just placing a strain on young people.

It's also failing retirees with low pensions.

Therese Nieder is 85. She retired at 60 after having worked for 46 years.

But she has had to keep working for years because she wasn't receiving enough money to live.

It makes me sad, my God, all I ever did was work, work, work.

I have three children, and they work for the common good, and still...

For 10 years she took a break from work to raise her children, earning only a little on the side.

Because she didn't pay into the system at the time, those years don't count.

It's left a gap that she still feels.

Now Therese gets government assistance.

I've been divorced for many, many years.

I raised my children on my own in this apartment.

That's why I couldn't work until they were older.

And she is not alone. About one in five seniors over 65 in Germany are at risk of poverty.

The ratio is even higher among women.

A weak point is we don't have any direct mechanism for combating poverty in our pension system.

There's no set minimum pension. We did introduce one element, the basic pension that offers people a supplemental income when they've worked for a long time but receive a low pension.

But the proposals didn't expand that. I think that would have been a good way to strengthen our pension system against poverty.

Compared to other countries, Germany's pension system is mid-rate.

It relies on three pillars: the state pension plan that workers pay into, occupational pension schemes offered by employers, and private savings.

But unlike countries like Sweden or the Netherlands, Germany mostly relies on state-funded pensions.

In other countries, retirement plans are much broader and are therefore considered more stable.

Mrs. Nieder advises young people not to rely entirely on the state either.

Save up money, set it aside.

That adds security.

When it comes to your pension, you never know how high it will be.

You can't depend on it.

But when you're young, you want to spend a little.

Take a nice trip or buy something nice. If you never treated yourself to anything nice, that'd be a shame.

Today she can't afford anything over 1,000 euros.

Then my teeth, that was a very big expense.

At first I told the doctor, I can't afford that, but he told me I needed to do it.

In the end, she received support from a charity called "Ein Herz für Rentner" (A Heart for Pensioners).

Financed with private donations, the organization holds regular meetings for pensioners who don't receive enough.

Just last week, we received a request for support from a retiree, 82 years old, who said he had been sleeping on the floor for the past six months because his slatted bed frame was broken.

Those are unacceptable living conditions, and here in a social welfare state like Germany's, completely unconscionable.

But despite their own troubles, the pensioners gathered here today sympathize with young people.

I love life, but I wouldn't want to be that young again.

I think today's youth might even be a little worse off than we were.

I'd say they have it harder than we did, and I think they need to fight a lot harder.

And that's precisely why Arthur wants tomorrow's pension system to work for everybody.

I don't want to take away anybody's pension, and I certainly don't want to take anything away from retirees who already receive very low pensions.

But I do want the entire concept to work for all members of society, young and old alike.

Arthur says the new reform proposals at least have potential.