Pension reform: DIW President for abolition of "pension at 63"

The President of the German Institute for Economic Research, Marcel Fratzscher, has emphasized the necessity of the planned abolition of the "Rente mit 63," which allows early retirement without deductions after 45 years of contributions. He told the "Rheinischen Post": "The abolition of the Rente mit 63 is a central and financially the most important element of the planned pension reform."

An abolition is estimated to bring about approximately ten billion euros in long-term savings and 125,000 additional jobs per pensioner cohort. "Without this element, the pension reform is dead," Fratzscher added. "The federal government would have to start from scratch and, above all, completely reset the financing of the statutory pension."

Without the abolition of the "Rente mit 63," the statutory pension would also lead to an even greater redistribution from young to old and from poor to rich, Fratzscher said. "Because those who benefit from the Rente mit 63 are disproportionately often high earners and men, and much less often people facing pension poverty." The three CDU state premieres from eastern Germany - Michael Kretschmer (Saxony), Sven Schulze (Saxony-Anhalt), and Mario Voigt (Thuringia) - had opposed the commission's recommendation.

In a letter to the federal government, they defended the "Rente mit 63." They declared that "who has paid for 45 years has paid enough." According to the commission's recommendation, the earlier retirement without deductions after 45 years of contributions, known as "Rente mit 63," would be abolished. Federal Chancellor Friedrich Merz (CDU) and Labor Minister Bärbel Bas (SPD) had shown their intention to implement all recommendations of the Rentenkommission.

Union Fraction leader Thorsten Frei and CDU General Secretary Franziska Hoppermann indicated during the weekend that the CDU remains committed to the abolition as part of a reform package. Even CSU leader Markus Söder opposes retying the whole package. Bas, who is responsible for the issue in the cabinet, has called for the Union to clarify its position on the "Rente mit 63."

She does not rule out tying the package again if the Union's opinion is in favor. The "Rente mit 63" is a commonly used, but not entirely correct term: currently, earlier retirement without deductions is possible at the age of 64.5 years, provided there is sufficient insurance period.