Renten economist Axel Börsch-Supan argues that raising the retirement age to 70 years is unnecessary. Speaking to “Welt am Sonntag”, he stated that life expectancy is increasing slowly, advising that “roughly speaking, one would have to work one year longer every 14 years”. Consequently, a “retirement at age 70” is far in the future.
Instead, the head of the Munich Research Institute for the Economics of Aging (MEA) advocates for greater flexibility regarding retirement age, suggesting that the penalties for retiring early should be increased. He believes the current reduction of 3.6 percent is too low, and that it should mathematically be five percent.
Börsch-Supan identifies two major policy errors concerning pensions: maintaining the pension level floor and offering a penalty-free pension after 45 years of work. He estimates that the pension level floor alone will cause additional costs amounting to about 200 billion euros. Furthermore, a significant increase in contributions is expected by 2031 at the latest, when the pension insurance reserve, currently around 40 billion euros, is depleted.
He considers the pension option at age 63 to be particularly detrimental, noting that, “surprisingly, it is mainly utilized by well-paid and healthy people”. Abolishing this option could potentially keep over half a million additional workers within the system over a two-year period.