Pension reform: More work for less pension - experts warn!

Pension reform: More work for less pension - experts warn!

The debate about pension reform in Germany is picking up after Clemens Fuest, President of the IFO Institute, has asked for a fundamental reform in the program "Münchner Runde". His demands result in broad criticism, in particular from social associations such as the Social Association of Germany (SOVD), which describes his proposals as "unreality and socially unjust". Fuest advocates that the Germans should work longer and also suggests increasing the retirement age and slowing the pension increases. He warns that future pensions can no longer rise as much as wages, which questions the entire pension structure.

Currently, the standard age limit for people born from January 1, 1964 is 67 years. However, Fuest criticizes that a higher retirement age is particularly unfair to people with a lower life expectancy. The colleague Christiane Benner, chair of IG Metall, rejected this argument and emphasized that the retirement age was problematic for 25% of the employees. This discussion about the retirement age is conducted against the background of pension package II, which was decided by the Federal Cabinet at the end of May 2025 to stabilize the pension level in the long term and to ensure the financing of the pension in view of the demographic change.

pension structure and legal framework conditions

The statutory pension insurance, which was introduced in 1889, is the main source of their income for many seniors. According to current statistics, 92% of senior citizens and 88% of the elderly pension in 2019. In order to cope with the increasing number of pensioners in a falling relationship to contributors, the retirement age is gradually increased to 67 years by 2031. This increase was initiated in 2019 with the year 1947 and is now being carried out annually by one month, until 2023. From 2024, the born vintages are to be adapted to the new age limit in 2-month steps from 1959.

early retirement is possible, but leads to discounts. Various factors, such as health, private and professional situation, can be crucial here. In the event of an early pension reference, for example, a reduction of 3.6% per year is made. In addition, an increase in the start of the pension after the regular age is rewarded with a surcharge of 0.5% per month.

criticism and challenges

The criticism of the reform proposals illustrates the disagreement within the traffic light government and among the social associations. The BDA in particular warns of the possible additional costs of 500 billion euros over the next 20 years and also demands an increase in the retirement age. At the same time, Ines Schwerdtner, party leader of the left, expresses skepticism towards the proposals of Minister of Labor Bärbel BAS (SPD), who provides for an expansion of the contribution payments from politicians and the self -employed to the pension fund.

whether and how it succeeds during demographic change to secure the pensions permanently remains to be seen. The demographic change already shows the first effects, since the number of over 65-year-olds will grow to at least 22.7 million by 2040. While the pensions continue to remain the main source of income in old age, many seniors are affected by old-age poverty, the rate of which was among the over 65 years of 18.1% in 2022. The planned reforms must now be introduced in the Bundestag in order to be effective.