Germany’s FDP proposes reworking pension reform with flexible retirement age

Germany’s Free Democratic Party (FDP) has suggested reworking the proposed reform to the first pillar pension system to allow people to work longer by introducing a flexible retirement age.

“If you want to work longer, it’s worth it. In the context of this [first pillar] reform, we should also decide to make retirement [age] more flexible so that people can voluntarily work longer,” said Christian Dürr, head of the liberal party’s parliamentary group, in an interview with Bild Zeitung.

The FDP is looking again to Sweden as a model to transition to a more flexible pathway for retirement in Germany, for people wanting to work longer.

“Why should I prohibit someone from working at 70 or 72? That would be downright crazy,” Dürr said in the interview.

He added: “The Swedes have done something very clever: they have made retirement more flexible. The rigid design no longer applies according to the motto: everyone is equal, everyone retires at 65 or at 67.”

In Sweden employees can start withdrawing pensions from the age of 63, and retirement age is linked to life expectancy.

The comments made by the head of the liberal party’s parliamentary group add a further source of attrition on pension policy among coalition partners.

The German government has put forward the reform package Rentenpaket II to keep the level of pensions stable at 48% beyond 2025, until 2039, damping the increase in contributions and public subsidies to the first pillar pension system through the generational capital equity fund.

The FDP wants to introduce individual accounts for contributions to the first pillar pension system to make the German first pillar similar to the Swedish premium pension model.

According to the plan, in fact, the generational capital equity fund will invest public funds to slow down the contribution rate increase in the first pillar.

FDP’s member of parliament Johannes Vogel said that the pension package goes in the right direction, but is not yet ambitious enough to implement the goals agreed in the coalition agreement, pushing for a “real equity pension” and an exit from the “Rente mit 63” option allowing long-insured people to retire at 63.

The coalition partners – Social Democrats (SPD) and Greens – have rejected the possibility to rewrite the reform.

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