The early retirement boom in Germany: there is a risk of a cost explosion, according to the Bild newspaper

The early retirement boom in Germany: there is a risk of a cost explosion, according to the Bild newspaper

The number of applications for early retirement continues to rise in Germany, which could now lead to a cost problem, reports the Bild newspaper. By the end of September 2023, 245,289 applications had already been submitted, which corresponds to an increase of 16.8 percent compared to the previous year. This early retirement boom is leading to rising pension costs for Germany. The German pension insurance confirms this trend and cites the aging baby boomer generation as the reason. The pension without deductions after 45 years of insurance was introduced in 2015, but the former Labor Minister Andrea Nahles, who introduced this regulation, today speaks out against the “unfortunate early retirements”. According to Bild-Zeitung, the monthly costs for the “pension at 63” amount to 3.7 billion euros. Early retirement is also being criticized by economic experts, and reforms and an increase in the retirement age are being called for.

According to a report by inFranken.de, the rising costs of early retirement could have an impact on the market and the financial industry. A possible consequence could be that pension insurance requires higher contributions from employees and employers in order to cushion the rising costs. However, this could lead to dissatisfaction among employees and possibly lead to a decrease in private pension provision. Another impact could be that the pension system introduces reforms to limit or abolish early retirement. This could lead to longer working hours for employees and later retirement. Such a reform would also likely have an impact on the labor market, as workers would have to stay in the workforce longer and fewer jobs would be available to younger job seekers.

It remains to be seen what measures will be taken by pension insurance and politicians to deal with the rising costs of early retirement. However, it is clear that a reform of the pension system seems essential to ensure the long-term financial stability of the pension system and the provision of pensioners.

Source: According to a report by www.infranken.de