Members of the Pensions Commission are defending their rejection of a proposal that would allow individuals to retire early based on their accumulated contribution years, accusing its proponents of lacking understanding of the system. Socio-economic expert Georg Cremer told the “Neue Osnabrücker Zeitung” (NOZ) that the supporters of this proposal never provided a reasoned justification for why it would lead to greater fairness.
The fundamental rule of the German pension insurance is the principle of equivalence. This means that it should not matter whether 45 accrual points were earned by reaching the average salary over 45 years, or over 40 years while earning a salary slightly above average.
Economist Peter Bofinger voiced strong criticism to the NOZ, pointing out that if a scholar starts his career late, say at age 45, and earns the average income for the next 20 years, he will receive only half the pension of a worker who started and worked for 40 years. Bofinger questioned why such a scholar would then have to wait longer to retire. He asserted that politicians and scientists advocating for this change clearly did not grasp how the system works.
The original proposal had been put forward by Jens Südekum, a consultant to Finance Minister and SPD leader Lars Klingbeil. It had also received support from Chancellor Friedrich Merz and CSU leader Markus Söder. Manuela Schwesig, the Prime Minister of Mecklenburg-Vorpommern (SPD), strongly criticized the Commission’s rejection, telling ZDF that it must be possible for someone who started working and contributing at age 20 to be able to leave earlier than someone who started at age 30, and insisted the proposal be considered. A preliminary decision regarding the pension reform may be finalized during the coalition committee meetings this Wednesday.
Bofinger illustrated his objection with a financial example: two employees, Mr. Müller and Ms. Maier. Mr. Müller worked 45 years at the average income, while Ms. Maier worked 40 years. If they retire at the same age, Mr. Müller will have 45 accrual points and Ms. Maier will have 40. This means Mr. Müller will receive 12.5 percent more in pension than Ms. Maier. Bofinger warned that if Mr. Müller were allowed to retire two years earlier than Ms. Maier, this extra advantage would not be covered by his contributions. He added that while he could still retire early later on, he would face a 7.2 percent reduction in his pension. Bofinger concluded, emphasizing the necessity for policymakers, “to take a mandatory course: the multiplication table of pensions.”
Commission member Cremer raised another concern: they feared that, similar to the “Pension at 63” initiative, this option for early retirement without a penalty would be exploited by individuals with superior career profiles. Furthermore, allowing this would send a signal that those who pursue longer education or studies must wait even longer to retire. To mitigate potential disadvantages, the Commission suggested introducing easier access to pensions following an individual health assessment.
