According to calculations conducted by the Institute of the German Economy (IW), the five-year transitional period proposed by the SPD before abolishing the penalty-free early retirement option after 45 years of contributions would lead to approximately two million skilled workers and employees retiring prematurely.
Stefanie Seele, a labor market expert at the IW, explained that between 2027 and 2031, five cohorts that were particularly large at birth will reach the retirement age for those with long-term insurance. She estimates that 1.8 million people from these groups would benefit from the five-year transitional arrangement. She warned that this would cause many highly qualified workers to retire, thereby hindering economic growth. Seele based her estimation on 2025 data, which showed that 27 percent of the 1958 cohort retired earlier and without incurring penalties.
Bernd Fitzenberger, Director of the Institute for Employment Research (IAB), voiced similar concerns. While he suggested that a five-year transitional period is politically understandable, he deemed it highly problematic considering the large birth cohorts who are set to exit the labor market in the coming years.
The head of the IAB fears that this five-year transition would prematurely remove an estimated 1.5 to 2.5 million individuals from the workforce. These workers would go into retirement two to three years earlier and likely work significantly less after retirement.
Fitzenberger therefore advocated for a pension reform without any transitional phase regarding the “pension at 63” (Rente mit 63). However, he suggested maintaining the unreduced early retirement option for those who have worked at least 42 years under mandatory social security, a measure that would drastically reduce the number of eligible recipients.
