Early retirement: four years less work

Early retirement: Four years less work

The statutory pension principle in germany is a very simple: the actively employed numbers with their contributors the pensions of the retirement. Therefore, the german pension insurance is also called generation contract because the boys for the old concerns. But the principle works well only if at least as many in working life look at how to leave. That’s no longer the case. The demographic change is the coarse enemy of the pension principle.

Today, fewer children are born in germany than earlier and people become old. The lack of offspring and rising life expectancy make up the age pyramid on the head: less and less boys are expected to pay for the pensions of more and more ages. That can not work in the long run. The federal government wants to fix the problem by raising the age limit for retirees from 65 to 67 years: the regular age limit increases in the years from 2012 to 2029 in one- and two-month steps. The born 1964 must be working first up to 67 to receive a trail-free pension.

Pension with 69?

The annual yard to 67 does not seem to be able to loose the generation problem, so german economic institutions in a joint diagnosis for the federal ministry of economics demand a further increase in retirement age by two more on then 69 years. As a reason for this is called corona. In addition, in the next few years, the birth-stared foreways reach the retirement age and according to calculations of the experts about 400.000 people left the labor market as a peak. Immigration do not rich to fuel this cheek. Other proposals, the contribution-financed pension system to strong, rely on higher contributions or an extension of the district of the deposits, such as officials.

The statutory pension is safe, sales politicians for decades bravely. A system can not work if the crucial parameters are permanently worsening. Returning at retirement age can not be the solution, because for many years every second uses the possibility to go in a pension prematurely. This can also be found in the pension insurance report 2020 of the federal government.

From 63 with tee

The age limit for the rule resources with 67 is the principle – and of which there are exceptions. One of them is the retirement pension for the long-term ared. The must have paid in the pension insurance at least 35 years in order to be at pension prematurely. The gradual increase of the 65. The 67 year of life also applies to this group of persons, but they can already retire from 63 years prematurely, but with a discount on the actual retirement pension. Around 152.000 legally pension insured in 2019 have used this possibility, which are 16 percent of all retirement pensioners. The absolute as well as the percentage of the early retirement with 63 has been constant for years. This is assigned to the german pension insurance federation on request.

For each month, which a pension begins before the regular retirement age, 0.3 percent of the retirement pension will be deducted, which the insured had received with achieving the rule age limit. If the pension begins four years earlier, ie 63 instead of 67, a maximum discount of 14.4 percent is fally. At a born in 1960, which can go in retirement pensions by raising the age limit at 66 years and 4 months, the discount is 12 percent. Suppose, in whose pension notice is a retirement pension of 1.500 euros calculated, then the shortness is 180 euros. The pension thus amounts to 1.320 euros. Such implications seem to be more important to many insured people than working for years.

Voluntary deposits as compensation

Shorts can be compensated in whole or in part by additional contributions. Up to the planned pension entry with 63 voluntarily paid additional pension contributions. How high this amount is, the pension insurance calculates on request. An example has calculated it on request for this article: for an applicant who could go in pension at 67-free, but this wants to do with 63 years, has a actual retirement pension of 1.000 euro at a discount of 14.4 percent. That’s 144 euros. To compensate for this reduction, he must currently around 38.Deposit 000 euros to the full 1.To get 000 euro pension.

The compensation can be made from the 50. Be paid in the year. Whether it is worth, above all depends on how old the early retirement becomes. The closer he comes the 100, the more he benefits from the additional contributing. Compensation of the discount is a financial risk, yet trend: the pension insurance receives more and more voluntary contributions to compensate for later pension reductions. In 2019, the number of insured persons (25.800) so also the sum of the deposited amounts (415 million euros) more than doubled against 2017.

Digital pension view from 2023

Additional services are another possible possibility to compensate for pension roots. Up to the regular pension entry, early retirement leader with 63-year up to 6.300 euros are obtained without counting the income to the pension. By reaching the retirement age, the high of the additional income does not matter anymore. Anyone who liked 63 in part-time rates can already go in agreement with his employer from 55 years in partial retirement. How that works, we report in the next post to early retirement.

Incidentally, from 2023 there should be a digital pension review for legally insured persons. On a new platform, they should then be informed at any time about the individual claim from the legal, operational and private age protection. This project seems as ambitious as to bring the generation contract to the pension by raising the age limits in balance.

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