Record numbers: Almost 270,000 Germans are retiring without deductions!

Record numbers: Almost 270,000 Germans are retiring without deductions!

A remarkable turnaround in the pension landscape can be seen in the latest statistics, which show how many people in Germany are already retiring early. In 2024, almost 270,000 people will have decided to retire earlier without deductions. This means that a large number of pensioners are bringing forward the timing of their exit from working life, which poses new challenges for pension policy and its future design. World reports that 937,000 insured people took advantage of an old-age pension from the statutory pension insurance for the first time last year.

The age limit for particularly long-term insured people who have paid into pension insurance for 45 years was 64 years and 4 months in 2024 for those born in 1960. This regulation, which has been controversial since its introduction in 2014, could reach a critical point due to the increasing number of people entering retirement. The focus is particularly on the baby boomers – born between 1954 and 1969. A study by the German Economic Institute (IW) shows that 44% of this generation, which was born between 1954 and 1957, took early retirement, and among new retirees the proportion was even over 55%. This means that well-educated people, often higher earners, are more likely to opt for early retirement than their colleagues from lower wage groups who tend to forego it for financial reasons. daily news adds that early take-up could continue to increase from 2025, as those born between 1958 and 1960 also retired early.

The pension landscape is changing

The pension fund is facing an enormous burden. In 2023, around 18.9 million old-age pensions were paid out, a new high. This is accompanied by record expenditure: the pension insurance company spent 286 billion euros on pension payments. Forecasts suggest pension spending could rise to over €800 billion by 2045, raising questions about future funding. According to the 2024 pension insurance report, it is expected that pension contributions could rise from the current 18.6% to up to 21.4% if no legal adjustments are made.

One of the challenges is the increasing take-up of the tax-free pension, which primarily benefits high-earning and better-educated employees. For 2023, the pension insurance reported that around 279,000 insured people received an old-age pension for the first time for those who had been insured for a particularly long time, while 225,000 people took advantage of a pension payment with discounts of 0.3% per month for early retirement. The German pension insurance offers comprehensive data and insights into these developments on its statistics portal.

Political decision-makers, including the federal government under Chancellor Friedrich Merz, have already launched a “Pension Reform Commission”. This commission is intended to find ways to sustainably secure pension levels and keep baby boomers in working life for as long as possible. In view of demographic changes and the fact that the highest number of baby boomers will reach the standard retirement age in 2031, the future of pension insurance is in jeopardy. It remains to be seen what steps will be taken to do justice to both pensioners and employees and to ensure the stability of the pension system in the long term.