Blog/Sovereign Debt Crisis
Posted Aug 18, 2016 by Martin Armstrong
The Pension Crisis continues to spiral out of control and the central banks are incapable to reversing their policy. Raising rates now will cause budgets to explode and all the bonds they bought would collapse in price no less become totally unsalable. Now in Germany, the Bundesbank has addressed this crisis advising that the population must now work long term before receiving a pension and they must endure significantly higher pension contributions. In its monthly report published this week, the German central bank recommended increasing the retirement age to 69 years until 2060. They bluntly said that the federal government should not hide the fact that “further adjustments are inevitable.”
They pointed out that the projections until 2030 for pensions were based on calculations from the year 1989 when interest rates were substantially higher. The pension projections were never extended beyond that 2030 calculation. Currently, the retirement age will be gradually increased from 65 to 67 years. The projections of the federal government by 2030 will also limit the pension contribution to a maximum of 22% of gross earnings of workers. The Bundesbank says that this will need to rise significantly. They further point out the because of rising life expectancy and the low birth rate in the long term, the system will not be sustainable at current levels. The Bundesbank has stated the retirement age must rise to 69 and the current contribution of 18.7% must rise to 22% minimum.
Welcome to the collapse in socialism. Government is great and promising everything, and incapable of managing anything.