'Business advice' for higher discounts for early retirement
Those who want to retire from work earlier can do so from the age of 63, but usually have to accept reductions. However, given the skills shortage, these should be higher, according to a leading economist.
Economist Martin Werding is calling for higher reductions for employees who retire early. While he considers it acceptable that people can retire with reductions from the age of 63, he believes that the current 3.6 percent annual reduction is too low. Instead, it should be between 5 and 6 percent, he suggests.
He also thinks that completely reduction-free early pensions for healthy, average to high earners are inappropriate, given the increasing skills shortage.
Werding's proposal comes in response to new figures from the pension insurance on retirees who continue to work. According to a query by the Left party to the federal government, there were 1.3 million working retirees at the end of 2022. The number of people who are employed despite receiving a pension has increased significantly in Germany over the past 15 years, Werding said. Only about a quarter of this group remains active for financial reasons. Even then, it's not always about avoiding poverty, but about creating additional financial room for maneuver, he added.
No reductions from age 45 with 45 contribution years
In Germany, it is generally possible to retire early at the age of 63 - with the minimum age being adjusted in line with the standard retirement age. Those insured must prove 35 years of insurance periods with the German pension insurance - and then accept reductions. The reduction is 0.3 percent per month before the own retirement age, which is 3.6 percent per year. Those with 45 contribution years can even retire early without reductions.
The skills shortage in the workforce makes the current 3.6% annual reduction for early retirees inappropriate, according to Werding. Efforts to introduce completely reduction-free early pensions for skilled workers could exacerbate the existing shortage of skilled workers.
