An analysis by the Federation of Researching Pharmaceutical Producers (VFA), reported by the Funke-Mediengruppe newspapers, suggests that a later retirement age could increase Germany’s economic output by up to 106 billion Euros annually. The study calculates the theoretical potential if the standard retirement age were raised to 70, provided that older people are healthy enough to work for longer.
This analysis occurs amidst ongoing debates regarding pension reform. Just recently, the Pension Security Commission presented its own recommendations, which include linking the retirement age to increasing life expectancy. Based on current assumptions, this linkage would raise the standard age by roughly six months per decade. The Commission also emphasizes the importance of prevention and rehabilitation to ensure people can actually work longer.
The VFA believes that the critical factor overlooked in this pension debate is health. “We must talk more about the prerequisite for a longer working life: health,” stated VFA President Han Steutel to the newspapers. “Whoever is supposed to work longer must also be able to work longer while staying healthy.”
The VFA’s model assumes that the standard retirement age eventually reaches 70, allowing older workers to remain employed longer. According to the calculations, about 1.6 million people aged between 66 and 69 could work an additional period. This equates to nearly 800,000 full-time positions. Assuming an average overall economic productivity, this additional labor could theoretically boost Germany’s Gross Domestic Product (GDP) by 2.4 percent, or 106 billion Euros per year. For the state and social security systems, this would generate additional revenue exceeding 40 billion Euros, including nearly 30 billion Euros in supplementary social contributions. The authors, however, caution that this represents the maximum conceivable potential of such a reform, noting that current discussions only involve a gradual increase in the retirement age.
Steutel stresses that raising the age alone is insufficient. “A higher standard retirement age is not a guarantee for additional employment,” he warned. The potential only materializes when prevention, rehabilitation, and modern medicine ensure that people remain capable of working in their later years.
The analysis corroborates this. The authors determined that a person’s health status determines not only if they “could” work longer, but whether they “want” to. Based on their calculations, the GDP could increase by another 0.2 percent, or approximately ten billion Euros annually, if the good health levels of people aged 55 to 65 were maintained an average of four years longer. The study also highlights the benefits of better care for chronically ill patients and higher vaccination rates to reduce sick leave caused by illness.
Steutel therefore called for a stronger alignment between pension and healthcare policy. “Healthcare policy is always economic policy in an aging society,” he asserted. Every extra healthy working month benefits the labor market, social security systems, and Germany’s economic performance capabilities.
