Pension debate: We have to work longer

Retirement outlook

In 2021, almost 269,000 employees took early retirement.

(Photo: dpa)

People always have children – at least that’s what Federal Chancellor Konrad Adenauer believed. Back then, in 1957, there were six people of working age for every pensioner. In 2040 fewer than two will have to finance a pensioner. If the state lets it go like this, either the contribution rates will increase immeasurably or the state will have to finance the gap. Apparently, Olaf Scholz does not want either. The chancellor wants to overcome the demographic trap by preventing early retirement without deductions.

The insight is new. It’s just over a year since he lashed out at the Scientific Advisory Board of the Federal Ministry of Economics. The experts had called for “retirement at 68”.

If Scholz is really serious now, it would be a turning point in pension policy. Andrea Nahles, head of the Federal Employment Agency and former Labor Minister, had introduced early pension payments without deductions. One thing is also certain: the SPD chancellor would inevitably mess with the powerful union bosses if it were abolished.

Nahles was only able to make retirement at 67 palatable to the industrial unions in particular, because it also opened up the possibility of early retirement. The main beneficiaries were and are above all male industrial workers, who have 45 years of pension contributions.

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The fact is that the standard retirement age of 67 for all employees will not be reached until 2031. The big adjustment screw is early retirement. Since its introduction in 2014, more than two million employees have taken advantage of early retirement.

In 2021 alone there were almost 269,000 employees, that is 26.3 percent of all new pensioners. If it stays that way, Scholz can only make cosmetic corrections and, for example, improve the additional income limits for pensioners. Incidentally, around 30 percent of pensioners are already working today. Some out of sheer lack of money, others because they appreciate the social contacts in working life.

>> Read also: Scholz reprimands the trend towards early retirement – ​​for which his party has taken care of itself

The entire pension system looks like it has fallen out of time anyway. Every year, more than 400,000 skilled workers are missing to keep the contribution rate constant. This corresponds to the population of a city larger than Wuppertal. Even if Germany exhausts the domestic potential – from increasing the number of women in employment to extending working lives – there will still be a labor force gap. Even more immigration and easier citizenship, which the Union is rebelling against, will not bring much relief.

If Scholz is serious about saving the pension system, he should now start a debate about a longer working life. The relationship between average working hours and retirement periods must not drift further apart. The ratio should remain the same. The message is: we all have to work longer.

More: Early retirement increasingly popular – why you should make up for deductions quickly

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