Long-time economic advisor Peter Bofinger has warned the SPD that they should abandon any effort to abolish the “pension at age 63” scheme. According to Bofinger, maintaining the rule is not economically justifiable and is “very costly,” he told Spiegel. He argued that abolishing the scheme would not penalize diligent workers; rather, it would simply eliminate “a bonus that is not justified by the contributions made.”
Bofinger challenged the claim that the pension provided solely for long-term contributors serves to reward hard work. He countered that the German system already rewards longevity. He noted that individuals who work longer inherently receive a higher pension than those with fewer contribution years, saying, “That is how the German pension system honors performance.” For example, he cited that someone working 45 years compared to 40 years ultimately receives 12.5 percent more in pension benefits.
Should the “pension at age 63” be retained, Bofinger stated that other groups would ultimately have to pay for it. “All contributors bear the costs, both employees and employers. Then, all other pensioners are affected because less money will be in the fund in the end,” he explained. The resulting costs are substantial, with the economist estimating them to be between five and ten billion euros-an amount roughly equivalent to “half a contribution point.”
Bofinger is a Senior Professor of Economics at the University of Würzburg. He was previously a member of the government’s pension commission at the request of the SPD. Furthermore, from 2004 to 2019, he was part of the Expert Council for Economics, known as the “Wirtschaftsweisen.”
