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Germany: Pension burden rises to more than two trillion euros

Because the baby boomers will retire in the coming years, pension expenditure will rise significantly, experts warn. At the end of 2019, they were already around two trillion euros for the next 40 years.

The pension burdens from federal and state officials will increase rapidly in the coming years, warn economists. The reason: the baby boomers retired - "as a result, pension expenditure will rise sharply," warned experts from the Cologne-based institute of the German economy (IW), which is close to the employer, in a short report that is available to Spiegel.

This would create “spending constraints” that have not been adequately taken into account in financial planning so far.

The present value of the commitments, i.e. the current value of future payment obligations, currently corresponds to an amount of around 10,000 euros per inhabitant in the federal government. The value has risen by 88 percent within ten years.

The federal states employ the largest groups of civil servants with teachers and police officers - so their obligations are in some cases significantly higher. In Berlin and Hamburg, for example, this would add around 20,000 euros per inhabitant. The pension burdens made up an average of a third of the countries' annual economic output.

Around two trillion euros for the next 40 years, and thus around 60 percent of annual German economic output, result in the obligations of the federal and state governments combined at the end of 2019, the report says. The funds and reserves of the federal and state governments only covered a small part of the actual obligations.

Source: Welt
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