GERMANY - The southwest state of Rhineland-Palatine is to offer civil servants the opportunity to retire at 68 instead of 64 currently.

State finance minister, Ingolf Deubel said the offer was being made to cut pension costs on the one hand and to retain certain qualified personnel on the other. According to him, the state's pension costs will come down owing to the reduced timeframe for paying out benefits.

But "if a civil servant takes us up on the offer, we reserve the right to decide whether, from a performance perspective, it makes sense to employ that person until 68," added Deuber.

Rhineland-Palatine has 65,000 civil servants, including government employees, teachers, police and firefighters. The state estimates that the offer would apply to only about 500 of these each year. Deuber said that in exchange for working until 68, the selected civil servants would receive an extra month's salary per year.

Rhineland-Palatine's proposal was welcomed by DBB, an association representing German civil servants. "We definitely feel that it is a fair offer as the civil servants are getting compensated in exchange for retiring later," a DBB spokesman told IPE from Berlin.

However, Deuber said he did not think all of Germany's 15 other states, especially those in the east, would be in a position to make a similar offer to their civil servants.

"If I were a minister in east Germany and I had an extra 10,000 to 20,000 people on board, I'd probably not make such an offer," he said.

Deuber added that in west German states like Rhineland-Palatine, ministers should not encourage early retirement for civil servants, as their skills were becoming increasingly in short supply.

The DBB spokesman agreed with Deuber's view, noting that IT personnel and teachers were becoming rarer. "The public sector has difficulty recruiting IT personnel because of its pay scale. Teachers in Germany are also getting older and replacements have been hard to find," he said.

Regarding financing of civil servant pensions, Rhineland-Palatine has shown itself as the most innovative of German states. In 1996, the state was Germany's first to create a fund to pay civil servant pensions and end the pay-as-you-go (PAYG) method.

Since then, another seven German states have followed Rhineland-Palatine's example.