Can a roofer continue working until retirement age? The tough job of installing, repairing, and maintaining building roofs was the example chosen by Angela Merkel’s then coalition government with the Social Democrats to defend a law that would allow all workers who had contributed for at least 45 years to retire two years before the official age —then 65 years old— without financial penalty.
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The law, which came into force in 2014, thus allowed retirement at 63 years of age at that time. This was set as an exception to the decision to gradually raise the general retirement age to 67. “I cannot allow a roofer to continue working on a roof at 67 years old,” said then Social Democratic politician and former SPD chairman Kurt Beck. However, 12 years later, the committee of experts tasked with analyzing the pension system has now recommended to Friedrich Merz’s government to end this practice.
Germany has long been analyzing how to make its pension system sustainable in a context of demographic crisis and increasing life expectancy, coupled with a long period of economic weakness. For a couple of years now, the generations known as the baby boom, characterized by high birth rates, have been gradually reaching retirement age, which has increased pressure on public coffers. It should be noted, for example, that the generation born in 1964, with 1.4 million live births, was the largest in the history of the Federal Republic of Germany.
According to figures from the German Pension Insurance, since the so-called retirement at 63 was approved, almost three million workers have decided to retire early through this route. Furthermore, since 2015, about 30% of people retiring for the first time take advantage of this option. As the current retirement age is 66 years and 4 months —gradually increasing to 67—, this means that retirement at 63 is actually retirement at 64 and 4 months currently.
Ralf Hermann is one of the Germans who opted for this option. “If the coronavirus hadn’t arrived, I would have continued working,” he explains, however, from his home by phone in Magdeburg about an option he could have joined at 63 years and 6 months. “In my case, the decisive factor was the coronavirus pandemic. At that time, I was working at Flixbus, and that was no longer working out.” This motivated him to retire on the eve of his 65th birthday, in the first months of the pandemic in 2020, instead of in 2021, which was what he had planned.
Hermann, born on April 21, 1955, in East Germany, started working at 16 and therefore considers it fair to have been able to use this option. “I started contributing almost from the very beginning,” he recalls about his 48-year career, which allowed him to retire before the 65 years and 9 months that corresponded to him by his birth date. Trained in his youth as an electrician on the East German railways, he held various jobs, from inspecting large diesel locomotives or being a driving instructor to working in the housing construction sector until German reunification. Afterwards, after other jobs, he returned to being a driving instructor and training other instructors. “There are hardly any people left who complete those 45 years of working life,” he comments on the proposal to eliminate this option. “In my opinion, what they have done now with this whole issue is a smokescreen.”
However, economists see it differently. The expert committee points out that many of those who benefit from this retirement could continue working and recommend putting an end to it. It is one of the 33 points of the German pension system reform package, which the Merz government has announced it will fully implement and expects to approve before the end of the year.
“The great advantage of abolishing retirement at 63 is that people remain in the system contributing for longer, and by retiring later, they also receive a pension for a shorter period, which stabilizes the pension system,” explains Marcel Thum, director of the Ifo economic institute in Dresden, while also pointing out that a study by the DIW has shown that the 63-year-old pension does not benefit people who have worked “long and hard” at all, but rather “those who work in offices.” “And there are two reasons for this. Firstly, classic manual workers, i.e., people who really work hard, often have discontinuous career paths that do not reach 45 years. They have often been unemployed or had to change companies or have been self-employed at some point. And, secondly, it is clear that if they do not earn much, the drop in earned income compared to retirement income is, naturally, painful.”
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The elimination of this retirement could mean savings for the state of 9.5 billion euros per generation, and the labor market would have about 125,000 additional full-time workers, according to a DIW study prepared for the Bertelsmann Foundation, which notes that each year, between 250,000 and 280,000 workers take advantage of this option. “This represents about a fifth of the total expenditure of the mandatory pension insurance, and the trend is increasing,” they wrote.
A study by the Prognos Institute for the New Social Market Economy Initiative (INSM) also showed in 2023 that the gradual abolition of this pension could alleviate the shortage of skilled labor and ease the burden on taxpayers. According to this study, without this pension, taxpayers would have had to contribute about 8 billion euros less in 2025.
“That the Commission has proposed ending this does not surprise me at all, because all the people who deal with pensions, who analyze finances and see how difficult the situation of our pension system is, have always proposed abolishing this 63-year-old pension,” explains Thum.
The broad package, which also includes other proposals such as the creation of a mandatory capitalization (private) pension, complementary to the public one, to which workers and companies will allocate up to 2% of their annual salary, can help make the pension system sustainable in the long term, provided that, as the economist points out, it is implemented “with speed.” “Nevertheless, crises that cannot be foreseen always arise, that’s how it is. But from the current perspective, I would say that if the reforms are applied, we are already on the right track.”
But not everyone sees it the same way. “The government must recognize people’s life paths,” said Yasmin Fahimi, president of the German Trade Union Confederation (DGB), who defends the fact that anyone who has worked for 45 years has earned their pension. “Abolishing this pension would be a slap in the face for those who have worked for decades, paid contributions, and contributed to the prosperity of this country,” declared Ralf Reinstädtler, head of social affairs at the IG Metall union.
Its proponents argue that it is indispensable, especially in professions with high physical or psychological demands, and point out that many workers doubt they can work until the normal retirement age. “This would be doubly unfair: an early start to working life and many years of hard work, often in shifts, reduce life expectancy and shorten the period of pension receipt,” denounce IG Metall. Likewise, a recent survey by the German Trade Union Confederation reveals that four out of ten workers in Germany believe they will not be able to hold out until retirement age, especially in the construction, crafts, and healthcare sectors, where the figures reach up to 70%.
This debate will surely capture much of the attention in the election campaign, which now begins for the Saxony-Anhalt elections on September 6. This eastern German state has the oldest population in the country. Furthermore, the public pension is, for most East Germans, the only means of subsistence in old age and is frequently used by politicians from the far-right Alternative for Germany (AfD), which, according to polls, would obtain between 41% and 42% of the votes in Saxony-Anhalt, which would likely lead to its entry into the first regional government.
