Retiring at 63 shows serious problems in the pension system - experts recommend abolishing it.

Poor development of the “pension at 63” signals problems in the pension system

According to a report by rp-online.de The number of applications for “pension at 63” rose sharply in 2021 and reached a record level. With a total of 245,000 applications in the first nine months of the year, this development clearly shows that there are serious problems in the pension system.

The “pension at 63” was introduced in 2014 as a special regulation for people with 45 years of insurance. It enables insured people to retire at the age of 63 without having to accept any deductions. This regulation was actually intended to enable people with a long working history to retire earlier.

Although it is important to ensure protection of trust for applications that are currently pending, in my opinion it is advisable to allow the “pension at 63” to expire and abolish it. The increasing number of applications shows that the scheme is not only being used by a few people, but is being used on a broad basis. This raises the question of whether the pension system is even able to cope with the need for early retirement.

Abolishing the “retirement at 63” option could have serious implications for the market and the financial sector. On the one hand, this would mean that more people would have to stay in work for longer in order to secure their livelihood. It could lead to an increase in the supply of workers, which in turn could increase competition for jobs and potentially lead to a decline in wages.

On the other hand, pension contributions would increase because fewer people are retiring and therefore fewer payments are being made into the pension fund. This would result in the pension insurance having higher expenses and less income, which could lead to financial challenges in the long term.

There is therefore an urgent need to rethink the pension system and find long-term solutions to meet the needs of people in old age. This could, for example, include a flexible pension scheme that allows people to decide individually when they retire, depending on their financial situation and health.