Bernd Fitzenberger, the Director of the Institute for Labour Market and Vocational Research (IAB), advocates for increased employment among older workers as a crucial measure to prevent deeper cuts to the national pension system. Writing a guest contribution for the “Handelsblatt”, Fitzenberger stresses that there is “still a lot of unused potential” noting that keeping people in the workforce longer benefits the system because “who works longer, pays contributions longer and receives the pension later”.
To achieve this goal, he proposes several structural changes. First, the maximum duration of unemployment benefits for older people should be reduced from 24 to 18 months. Furthermore, the reliance on state-funded partial retirement schemes must be scaled back.
Fitzenberger also introduces a recommendation for bolstering income security. He suggests that if an older individual loses their job and can only find a position that pays significantly less, they should receive temporary compensation to cover part of the resulting wage loss. According to him, this support would increase the individual’s motivation to return to work quickly.
Regarding financial transitions, he suggests that the state should provide tax incentives for severance payments if an individual takes a new job. Additionally, he proposes that these severance payments should trigger pension contributions, though these contributions could then be offset against the wages earned in the new job.
