In Germany the answer appears to be Maybe.
There are three pillars
to the German retirement system; 1) the government-run Retirement Insurance
system, 2) private company plans and 3) private individual retirement
investments.
The Public Retirement Insurance System, which also
includes survivor and disability benefits, has been dominant. Participation is
mandatory for employees, with each worker assessed for a sum based on annual
earnings. Premiums are deducted by the employer, with the employee paying half
and the employer half.
In 2015 the premium is 18.7 percent of the gross monthly wage or salary. This is assessed on monthly incomes up to a maximum of 6,050 euros (72,600 euros a year) in the west and 5,200 euros (62,400 euros a year) in the east.
Retirement now normally begins at age 65, though it is to be gradually increased to 67. Contributions to the plan are also to be increased, and maximum pensions eventually reduced from 70% to 67% of net pay. English language information about the German Public Retirement System can be found at www.deutsche-rentenversicherung-bund.de. (Click on "International" on the top right of the page.)
In 2015 the premium is 18.7 percent of the gross monthly wage or salary. This is assessed on monthly incomes up to a maximum of 6,050 euros (72,600 euros a year) in the west and 5,200 euros (62,400 euros a year) in the east.
Retirement now normally begins at age 65, though it is to be gradually increased to 67. Contributions to the plan are also to be increased, and maximum pensions eventually reduced from 70% to 67% of net pay. English language information about the German Public Retirement System can be found at www.deutsche-rentenversicherung-bund.de. (Click on "International" on the top right of the page.)
Company Plans (bAV betriebliche Altersvorsorge) have
traditionally been designed to supplement Retirement Insurance, and now will
play a greater role in taking up the slack. Government tax breaks and subsidies
will encourage companies and employees to invest in private plans. Though
company plans are not compulsory, they cover about three-fifths of the working
population, a percentage that is expected to grow. Pensions on company plans
usually also commence at age 65, though this is likely in many cases to follow
the Retirement Insurance practice and increase gradually to 67.
The third pillar, individual retirement investments,
have not been very significant up to now, but have recently been getting a lot
of attention as supplements to the Public Retirement Insurance. These private
plans include (but are not limited to) the Riester and Rürup plans.
Workers and other participants can get certain tax advantages and benefits from
government subsidies for these plans. The benefits and other details vary from
plan to plan. There are differing payment methods, payout schemes, tax
liabilities, portability opportunities and other factors that distinguish these
plans from each other. Certain plans may be better for different individuals
depending on their particular situation.
Germany’s retirement system is generous for many, but
getting less so. The post-World War II economic boom financed comfortable
retirements. The system still provides the bulk of income for retired people —
about 70 per cent as of 2010. Germans can retire with a full pension at 65,
though the age is gradually rising. People born after 1964 face a retirement
age of 67.
The system replaces 58 per cent of average take-home pay.
The pensions are funded by a payroll tax with no investment assets backing the
government’s promises — a so-called pay-as-you-go system. Pensions are tied to
earnings during a person’s working years. However, the formula now reduces
pension levels as the ratio of retirees to workers rises. An additional benefit
serves as a safety net for very low-income retirees. Many people who work for
major employers also have company-based pensions.
A member of Chancellor Angela Merkel's conservative
Christian Democratic Union (CDU), released data showing that, in two decades,
the statutory pension will only be enough to guarantee a life on the edge of
poverty, even for average earners. To make matters worse, what Germans have
managed to save during the course of their working lives is in danger of
evaporating in the chaos of the global financial and debt crises. Investment magazines
and bank brochures warn of a "pension trap" and, in the insurance
industry, there is talk of a "rude awakening."
Back in 2007, the government pension agency published a study
called "Old-Age
Pensions in Germany (PDF File)," which is the largest evaluation of
pension data ever conducted for Germans born between 1942 and 1961. The results
were alarming. They clearly showed that old-age poverty is increasing. The
reason for this trend is clear: The number of Germans in irregular work
situations has risen dramatically since 1996, from over 6 million to more than
10 million. Source
Pension reforms in 2001 and 2004 have changed the character
of the German pension system and shifted more responsibility to the individual.
This has resulted in a lack of confidence
Compared to the global average of 82 percent, Germans,
Australians, Britons, and Americans are the most optimistic with 66 percent, 65 percent, 69 percent and 70
percent of respondents respectively who say they are worried about their financial
situation after retirement. South Koreans (95 percent), Mexicans (92 percent),
Russians (92 percent) and Spanish (91 percent) are the most pessimistic
Much of Europe has a lack of confidence that their
retirement programs will be in place when they retire. In some places the confidence
has seemingly collapsed: only 11% of German employees are confident they will
enjoy a comfortable retirement, which in Poland falls further to just 4%. While
western Europe may have some of the best developed retirement systems in the
world, confidence that these systems will still be in place for future
generations seems to be rapidly eroding.
Only 15% of German workers have a plan for retirement that
is written down, 47% say they have a plan but it is not written down, while 39%
do not have a plan or have not thought about retirement.
In Germany more workers are saving enough for retirement
however, there are some compelling reasons why some people are not preparing
adequately for a comfortable retirement:
Did not start saving early enough
Globally, almost two in five working age people (38%) and
the same number of retirees (38%) admit they did not start saving for their
retirement early enough. This is a key reason for over half of working age
people in the UAE (55%), Brazil (54%), Indonesia (52%), and India (52%), and
for around half of retirees in the USA (51%) and Australia (48%).
Cannot afford it
Lack of affordability was also the main reason cited by
retirees for inadequate preparation for
retirement. Over a third (35%) of working age people and a quarter (26%) of
retirees around the world say they cannot afford to prepare adequately for
retirement. Around half of working age people in the UK (52%), France (52%),
USA (51%), Australia (45%) and Canada (44%) say that lack of affordability is
why they are not preparing adequately.
Were not aware of how much to save
More than one in five (22%) of working age people and three
in ten (29%) retirees globally say they did not know how much they needed to
save for a comfortable retirement. This rises to 41% of retirees in the USA and
39% in Singapore.
Paying off a mortgage or other debts
Mortgage repayments are a barrier to preparing for a comfortable
retirement. More than half say that paying off their mortgage is
preventing them from adequately preparing for retirement, with those in
Singapore (41%), Malaysia (38%), Australia (35%) and the UK (30%) being the
next most affected. Mortgage repayments were much less of a barrier to
preparing for a comfortable retirement for retirees (9%).
Paying off other debts
Around the world, almost a third (32%) of working age people
say they cannot prepare adequately for a comfortable retirement because they
are paying off other debts. This is a particular barrier for pre-retirees in
the USA (51%), Malaysia (49%), Mexico (41%), and Canada (41%). However just 16%
of retirees say debt repayment was a barrier to preparing for a comfortable
retirement.
Another factor which prevent saving for retirement is:
The economic downturn has significantly influenced the
ability of working age people to save for retirement. For example in France, (38%)
say the economic turn down of 2008-2009 is still affecting them, while the turndown of 2015-16 is hurting all of us.
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