CSU wants to increase deductions for early retirees

Retiring earlier is very popular in Germany. But it will become more difficult or at least more expensive in the future. According to the wishes of Alexander Hoffmann, head of the CSU regional group in the Bundestag, the deductions for early retirement for “those who have been insured for a long time” should be increased. "The discounts should increase from 0.3 to 0.4 percent per month, that is overdue," Hoffmann told the newspapers that belong to the Germany editorial network.

The early pension for “long-term insured people” can essentially be claimed by anyone who has a total of at least 35 years of contributions to the pension insurance. It is then possible to retire at the age of 63. However: In return, pension payments will be reduced, currently by 0.3 percent per month. Anyone who makes use of the regulation one year before reaching the statutory retirement age will have their pension permanently reduced by 3.6 percent. Nevertheless, this option is very popular with many people nearing retirement. In 2025, 25.7 percent of all new pensions were for early retirement for “long-term insured people”.

Reason for the discounts? Anyone who takes early retirement will probably receive a pension for significantly longer than actually intended by the system. The pension entitlements accumulated over the course of life must therefore cover a longer period of time. Some experts have long complained that the deductions of 0.3 percent are calculated too low. In other words: Even with discounts, early retirees make a good cut - and the pension insurance pays them more overall than if they retired at the standard retirement age. The discounts would then be “not calculated in an actuarially fair manner,” as experts say.

The reason? Cash-strapped federal government

This is exactly where CSU man Hoffmann wants to start. The pension deductions have not been increased for years. »There was discussion about increasing it to 0.5 percent for a long time. Now, with legal protection, they will end up at 0.4 percent." When asked when this should apply, Hoffmann replied: "The best way is for it to be effective for the 2027 financial year. The Federal Ministry of Labor will make a proposal on the schedule. The move is also notable because the Federal Government's Pension Commission had discussed a possible increase in deductions, but did not include this step in its recommendations.

The background to the planned increase is that the federal government wants to cut its subsidies to pension insurance in 2027 significantly more than originally planned: namely by three billion euros instead of the previously estimated one billion euros. According to Hoffmann, the increase in pension deductions offsets part of the cuts in federal subsidies. This also ensures that pension insurance contributions do not increase more than previously predicted. “We will not increase pension contributions beyond the planned level,” he emphasized.

What is important is that the discounts do not apply to the “pension for those who have been insured for a particularly long time” with 45 years of insurance. Anyone who reaches this mark can currently retire without deductions up to two years before reaching the standard retirement age. The regulation, which was once introduced as “pension at 63,” is a thorn in the side of many experts because it primarily benefits employees with little physical strain and higher incomes – and not at all the hard-working craftsmen for whom it was once introduced. All other contributors and pensioners have to bear the costs, as the former economist Peter Bofinger explains here.