GERMANY – A board member of the German central bank has said a combination of lower pensions and later retirement “makes sense”.

“In the long term, future increases in contribution rates can be avoided only if the level of pensions is lowered or the statutory retirement age is raised,” said Bundesbank executive board member Hermann Remsperger.

“It seems to me that a combination of both approaches makes sense.”

“Without the measures approved at the end of 2003 an increase in the contribution rate to the statutory pension insurance scheme would also have been necessary this year.

“However, stabilising the contribution rate was possible only by drawing to a not insignificant extent on capital assets and thereby incurring greater general government deficits.”

Speaking at a roundtable in Frankfurt, He called the government’s proposals so far “appropriate”.

“With respect to the level of pensions the federal government has already made appropriate proposals with the introduction of a ‘sustainability factor’.

“The resultant gap in pension benefits can be closed by increasing the weight of supplementary private pension schemes.

The “decisive factor”, he said, was “ultimately the curbing of the contribution burden”.

“Only in this way can employment and thereby the financing base of the social security system be safeguarded on a permanent basis.