“Despite her old age, she is still very active and regularly helps around the house,” explains the reporter in a slightly admiring tone. It's about a hundred-year-old woman from Berlin-Wilmersdorf who is cheerfully toasting her birthday with the mayor. In 1963 this was worth a television report. Today there are around 17,000 centenarians in Germany.
People are getting older: in 1960, Germans received their pensions for an average of 9.9 years. By 2025 the average was already 20.7 years. Actually a great development, but a challenge for pension insurance. Because it works on a pay-as-you-go basis: the money from those who work and pay in is distributed directly to those who receive a pension.
More and more pensioners, fewer and fewer contributors
However, the longer lifespan increases the number of pensioners. Because fewer children are being born than back then, fewer and fewer contributors have to pay for more and more pensioners: in 1960 there were 3.79 contributors for every pensioner. Currently it is still around 2.1. The pension insurance estimates that it could be 1.7 in 2045.
From 2091, you will only be able to retire at the age of 70
At the beginning of the year, a pension commission was commissioned by the federal government to think about how the pension system could be better set up. Among other things, it suggests that the retirement age should be raised slightly on a regular basis - by around half a year every ten years. Roughly speaking, the retirement age would be 68 in 2051 and from 2091 you would only be able to retire at the age of 70.
The commission also wants to attract additional contributors to the statutory pension: self-employed people and members of parliament should have to pay in, and in the future also civil servants. In addition, a capital pension is to be introduced as an additional pillar of the statutory pension: a small part of employees' pension contributions is to be invested in the stock market.
End of “retirement at 63” is intended to finance restructuring of the pension system
Ultimately, this should make higher pensions possible for everyone. As early as the 2040s or 2050s, pensions could be higher than if the same money only flowed into the pay-as-you-go system, explains commission member Peter Bofinger, an economics professor at the University of Würzburg.
“However, building up the capital pension is ambitious and leads to pension insurance contributions rising,” says Bofinger. This can only be tolerated if savings are made elsewhere in the pension system. The Commission proposes, among other things, to abolish the so-called pension at 63, i.e. the pension without deductions after 45 years of contributions.
In 2014, Federal Labor Minister Andrea Nahles (SPD) made it possible for employees to retire two years earlier after 45 years of contributions - without deductions. Back then it actually meant: pension at 63. The name stuck, even if the gradual increase in the general retirement age to 67 means it is now a “pension at 64.5 years”.
Used differently today than thought back then
The “pension at 63” was intended primarily for those who had done a lot of physical work and as a recognition of lifetime achievement, i.e. a long working life. Those who are unemployed or sick for a longer period of time are left out. They can no more reach 45 years than those who, for example, stop working for a long period of time for the sake of their children.
Currently, almost 30 percent of a year take advantage of the tax-free pension. In 2025, 925,865 people retired, 262,361 of whom received the “pension at 63”. Statistically, these are those with particularly high pensions: those who took advantage of them in 2025 received an average of 1,677 euros per month (after deducting health and nursing care insurance). The general German average pensioner, on the other hand, was 1,196 euros per month.
An “extra bonus” that must first be financed
“Those who work longer get more pensions, which means their lifetime achievements are rewarded,” says pension expert Bofinger. For example, someone who has worked for 45 years will receive 12.5 percent more pension than someone who has worked for 40 years with the same income.
That's why Bofinger thinks it's unfair that those with 45 years of contributions can also retire two years earlier without deductions. “These two years are an extra bonus and it has to be financed,” says Bofinger. “Either from the contributors or from all other pensioners.”
The government hopes to save 10 billion euros a year
Abolishing this bonus should save around 10 billion euros a year. Anyone who wants to retire earlier should still be able to do so - but only with deductions: over two years it would be 7.2 percent less. If you want to retire two years earlier after 45 years of contributions, the statistical average would then be 1,556 instead of 1,677 euros.
But this does not apply to those who can no longer work. The Commission is proposing a hardship regulation for them. “So if people in a certain professional class can no longer be employed,” says Bofinger, “then they should still have the opportunity to retire early without deductions.”
