German opposition party Christian Democratic Union (CDU) has reignited the public debate on the early retirement option Rente mit 63, confronting governing coalition parties Social Democrats (SPD) and Greens.
Jens Spahn, former health minister, and now deputy chair of the parliamentary group of the Union – the alliance between the Christians Democratic Union (CDU) and the Christian Social Union (CSU) – said in an interview with German newspaper Bild am Sonntag that the early retirement measure is a burden for prosperity and for future generations, setting the wrong incentives.
“It should be abolished immediately and replaced by a better disability pension,” he added in the interview.
The Rente mit 63 rule was introduced in 2014 to give the option of an early retirement without deductions to employees who have paid contributions for pension benefits for at least 45 years.
The number of employees who have opted for an early retirement has grown from 151,000 in 2014 to 270,000 in 2021, according to the study Rente mit 63 – Quo vadis? published by the economics research centre Prognos, and commissioned by the Initiative New Social Market Economy (Initiative Neue Soziale Marktwirtschaft, INSM).
According to the study, early retirement drains funds for the first-pillar pension scheme Deutsche Rentenversicherung, with expenditures set to reach €716bn in 2045, and leads to a shortage of skilled workers in several industries.
The research showed that Rente mit 63 caused the employment rate to fall by around 4 percentage points in 2022 in the 60-65 years age group, equalling to a loss of about 207,300 employees subject to social security contributions.
Subsidies through taxes to the first-pillar scheme, would fall by €27bn in 2024, by €19bn until 2031, and by up to €51bn in 2045, without the early retirement rule. The contribution rate would be 22.2% in 2045 without the Rente mit 63 rule, against 22.8% if the rule continues to apply, the study added.
Spahn’s comment has caused firm reactions from representatives of the coalition parties Social Democrats and Greens.
Malu Dreyer, the prime minister of the state of Rhineland-Palatinate and member of the SPD, described Spahn’s comment as “unfair and ruthless”.
“It’s about people who have worked for 45 years and paid into the [first pillar] pension fund. People who have been working since they were 14 years old,” she added.
Green MP Frank Bsirske warned that getting rid of the ‘pension at 63’ measure would mean that millions of people retire with reduced pensions.
Johannes Vogel, deputy chair of the Liberal Democratic Party, an ally of the SPD and Greens in the government coalition, has instead called for a “flexible retirement age”, giving employees the possibility to decide for themselves when to retire.
Last December, chancellor Olaf Scholz opened up discussions on changing the early retirement rule by creating conditions for people to work longer.
“It is important to increase the share of those who can really work until retirement age. That is difficult for many today,” he said in an interview with German Funke Mediengruppe and French newspaper Ouest-France.
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