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OECD report highlights danger of German poverty in old age

Despite Germany's reputation as an economic hub, low-income workers in the country face a significant danger of poverty in old age. A survey showed German retirees face a sharp drop in earnings upon retirement.

The Organization for Economic Cooperation and Development (OECD) found in its report published Tuesday that low earners in Germany faced a greater drop in income upon entering retirement than in other industrialized nations.

The survey, which looked at future of pensions systems across 27 countries, reported that those earning half the average German wage would, upon retirement, receive only 55 percent of the income level they received during employment.

The level is lower than in all the other countries surveyed. A reason identified by the report was that Germany's pension system placed a greater emphasis on rewarding individual contributions to the pensions system, rather than the principle of redistribution.

Women were identified as being particularly at risk, with a high proportion working part time and many working for fewer years and on lower wages.

"We must be careful that the long term consequences for social cohesion and poverty in old age," said head of the OECD's Social Policy Division, Monika Queisser. "A systematic solution to the problem of poverty in old age is still missing in Germany," Queisser added.

Fewer younger workers

Germany was also identified as facing rapid population aging, with fewer people of working age available to support the pensions system. The number of working people per retiree is set to halve in the next 40 years, from about three to 1.5.

The OECD study also found that fewer German retirees owned their own property than was the average - around half compared an OECD average of more than three quarters.

Also on Thursday, a report published by several German research and statistical agencies also highlighted the danger of increasing poverty in old age.

Their joint report found that the risk of poverty for those between 55 and 64 had significantly increased. Meanwhile, a fifth of those between 18 and 24 were in danger of poverty in old age, with the proportion only expected to increase in the coming decades.

The definition of poverty was defined as an income of less than 980 euros per month, according to 2011 levels.

Involved in the compilation of the report were the Federal Statistical Office, Federal Center for Political Education, the Berlin Center for Social Research and the German Institute for Economic Research.

rc/ipj (dpa, KNA)