2024-02-21 01:53:09
In the next few years, the boomer generation will be retiring. Many people benefit from retirement at 63 – but for how long?
More and more people in Germany are working between the ages of 63 and 67. The number of people of this age subject to social security contributions and those in marginal employment rose from 1.31 million in 2020 to 1.67 million last year – an increase of around 27 percent. According to the German Press Agency, this emerges from a government response from the Left in the Bundestag.
Dispute over retirement at 63
According to the Ifo Institute, Germany is increasingly confronted with a worsening labor shortage due to demographic developments. At the same time, politicians must stabilize the pension system with an appropriately high level of benefits for everyone. Given these considerations, the pension at 63 must also be re-examined.
This grants people who have at least 45 years of contributions and who have reached a certain age an early pension without deductions. However, the term “pension at 63” is now misleading, as only those born before 1953 were actually able to retire at 63 without any deductions. For those born later, the age limit will be gradually raised to 65 years (more on this here).
The pension expert Matthias W. Birkwald (Die Linke) spoke out against abolishing the pension at 63, citing the increased employment rate of 63 to 67 year olds. Older people should not be forced to continue working due to a low pension, he said Birkwald.
Germany’s employers, the Union and politicians from the Greens and FDP see it differently. Baden-Württemberg’s Prime Minister Winfried Kretschmann (Greens) said in September last year: “We cannot afford for mainly healthy and well-earning people to retire at 63.”
Federal Finance Minister Christian Lindner (FDP) said in an interview: “Why don’t we set incentives so that people want to work longer – instead of financing their pension at 63? This is a retirement bonus for qualified employees.” But statistics show that the employment of older people has risen sharply in the past three years.
Reasons for more and more working pensioners
According to calculations by the Federal Statistical Office at the request of the Left, one reason for the increase is the high proportion of particularly qualified people among older people. On the other hand, working at retirement age could also mean being able to actively participate in social life for longer and counteract the threat of poverty in old age, the Federal Office continues.
Another, but crucial, reason for taking up a part-time job could be that almost every second pensioner over the age of 65 has a net income of less than 1,250 euros. More than 5.2 million of the almost 7.5 million people affected are women. Around 40 percent of those over 65 years old financed their living primarily from additional income. For the majority, the additional income was additional income in addition to their pension.
Incentives for more older employees in companies
The proportion of employed people in the 60 to 64 year old age group also increased from 47 to 63 percent between 2012 and 2020 – more than in any other age group, according to the Federal Statistical Office.
The aim of Federal Labor Minister Hubertus Heil (SPD) is to develop more incentives so that people who could voluntarily work longer. In doing so, he also opposed the abolition of pensions at 63. With him, there will be no pension at 70, as many conservatives wanted, Heil said in an interview.
More than two million applicants
When the pension at 63 was introduced by the then coalition of the Union and the SPD, the government expected around 200,000 applicants annually. But the forecasts were significantly exceeded year after year. In total, well over two million workers have recently applied for a pension at the age of 63. In the coming weeks, Heil wants to present his long-announced pension reform to stabilize pensions in the long term.