Raising of the Statutory Retirement Age to 67

In the spring of 2011, the German Federal Government was called upon to submit the Report under Section 154(4) SGB VI (Book VI of the German Social Code), requiring the Government's appraisal of whether raising the age limit for regular retirement was still tenable in due consideration of labor market developments as well as the economic and social circumstances of older employees. This report has reintroduced the topic of "retirement at 67" to both the public and the academic discourse. In March 2011, the German Bundestag invited Axel Börsch-Supan to deliver an expert opinion on the subject of retirement at 67; he was represented at the public hearing by Martin Gasche. The "Old-Age Provision and Savings Behavior" research unit took part in the scholarly discussion, thereby listing ten misunderstandings in connection with retirement at 67 (cf. MEA Discussion Paper No. 209-10). Based on these findings, along with some elaborations, members of the research unit published an essay in the journal Wirtschaftsdienst, querying whether "retirement at 67" in fact constituted a pension reduction program. They showed that this depended on the point of view taken. If one considered only the monthly pension payments, the insured themselves could avoid pension cuts by actually retiring at the age of 67 – that is, by prolonging gainful employment. Conversely, if one regarded the sum paid over the entire term of pension receipt, the insurants' behavior as well as their sex, earnings and previously acquired pension claims proved relevant. Another criterion was the scope of higher pension adjustments necessitated by "retirement at 67" measures. Not all insured persons must reckon with a reduction of their total pension sum; for several, it could even turn out to be higher. The average pension sum, however, is likely to decline. It follows that the statutory insurance scheme can hope for lower expenditures as a result of the "retirement at 67" reform. Even so, given the aforesaid interactions, such expenditure cuts and their potential contribution-reducing effect will prove to be relatively moderate. The overall perception, which takes account of both contribution and pension payments, is that the very young age cohorts will not be impacted: lower pension sums and lower contribution sums will just about balance out. Once more, the burden will fall on the middle age cohorts, which nevertheless largely contributed to the demographic problem on account of low child birth rates in their time. The – sole – beneficiaries of the "retirement at 67" agenda are yet again the pensioners with vested rights who, as of 2013, will enjoy higher monthly benefits throughout the entire remaining pension term, thus raising the implicit return on their pension insurance contributions.