The proposal by Labour Minister Bärbel Bas to link the retirement age to years of contributions has drawn sharp criticism from prominent economic advisor Martin Werding, raising concerns about its efficacy and potential for unintended consequences. Werding, in an interview with the Handelsblatt, dismissed the suggestion as “not new and lacking precision” despite its superficially appealing premise of increasing flexibility in retirement planning.
His primary critique centers on the fact that the proposed linkage would not, in effect, shift the overall retirement age backward. This means, he argues, that it would yield minimal savings for the pension system – the very goal proponents often cite. Instead, the linkage risks creating a system where individuals with higher incomes, particularly skilled male workers, can retire earlier than others without a demonstrable benefit to the system’s long-term sustainability.
Werding drew a parallel to the existing “Rente mit 63” provision, which allows individuals with 45 years of contributions to retire at 63. He argues that this provision, frequently touted as a social benefit, largely functions as a “golden handshake” for elite skilled workers, rather than a genuine lifeline for those in need. He claims the purported benefits are not as widely realized as frequently suggested.
Furthermore, Werding expressed concern that the linking of the retirement age to contribution years would fail to address the plight of individuals facing hardship and severe limitations in their working years due to illness or other unavoidable circumstances. The proposed system, he contends, would bypass these vulnerable populations.
Perhaps most significantly, Werding’s analysis indicates that this change could undermine a core tenet of the current system: the reward for investing time in education. By allowing earlier retirement based solely on contribution years, the incentive to pursue higher education and, consequently, potentially higher pensions, would be diminished, potentially impacting the future workforce’s skill level and competitiveness. The policy, therefore, risks creating a system that benefits a select few while simultaneously undermining the long-term health of the pension system and the broader economy.
