The head of the German Council of Economic Experts, Monika Schnitzer, is issuing a stark warning to the German government, advocating for swift and potentially unpopular pension reforms centered around extended working lives and increased contribution rates. In an interview with the “Rheinische Post”, Schnitzer characterized the current situation as “serious” emphasizing that without decisive action, social security contribution rates could soon reach 50 percent.
Schnitzer’s proposals are detailed and phased, moving beyond vague calls for reform. She argues that the significant increase in life expectancy-currently resulting in recipients enjoying an average of eight years longer in retirement compared to forty years ago-cannot be sustained without parallel adjustments to the working age. Her suggested approach involves progressively raising the statutory retirement age, with increments of six months every ten years. This would culminate in a retirement age of 68 by 2050, escalating to 69 by 2070 and ultimately reaching 70 by 2090.
Beyond the age question, Schnitzer highlights the issue of early retirement as a significant contributor to the funding crisis. She proposes substantially increasing penalties for those opting for “early” retirement, currently capped at 3.6 percent per year of early departure. Schnitzer believes this figure should be doubled, arguing that particularly skilled and healthy workers currently utilizing the “retirement at 63” option are prematurely leaving the workforce.
Her critique extends to proposals tabled by Labor Minister Hubertus Bas, specifically dismissing his suggestion to link retirement age to the number of contribution years. Schnitzer labeled this as “the retirement at 63 in new clothing” arguing it fails to address the underlying structural issues and risks exacerbating existing inequalities, as evidenced by the fact that many academics currently lack the necessary contribution years to qualify for the benefits intended for the longest-serving.
With the new Pension Commission of the German government set to begin its work in the new year, the pressure is mounting for concrete reform proposals. Schnitzer’s pronouncements represent a forceful intervention, highlighting the uncomfortable political realities required to secure the long-term sustainability of Germany’s pension system and raising questions about the fairness and equity of future reforms across different demographic and professional groups. The coming months will be crucial in determining whether the government can muster the political will to implement the difficult changes that Schnitzer deems essential.