The German liberal party, FDP, plans to scrap the early retirement rule ‘Rente mit 63’, igniting another battle on pension policy within the country’s coalition with the social democrats (SPD).

The FDP believes it is time to get rid of the rule giving the option to people that have been insured for a long time to retire at 63, and without pension cuts, in order to fight a shortage of skilled workers, the Bild am Sonntag newspaper reported.

The party’s executive committee is set to approve the proposal today to bring it to the members convening at a party conference at the end of the week, according to a report by broadcaster ARD.

SPD is fond of the ‘Rente mit 63’ rule, but it can no longer be afforded, Bild reported, referring to a 12-point programme drafted by the FDP. Moreover, the FDP wants to cut employers’ contributions for unemployment insurance after the retirement age is reached.

“Anyone who wants to still work at 72 [years old] should be able to do so under attractive conditions,” according to said programme.

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

The latest proposal by the FDP puts another strain on a fragile relationship with coalition partners SPD and the Greens, having diverging views on pension policies.

SPD’s general secretary Kevin Kühnert attacked the FDP head-on in an interview with the Tagesspiegel newspaper, adding: “The SPD will not allow our country to be run with the instinct of investment bankers.”

The social democrats approved the early retirement rule in the grand coalition with the CDU/CSU in 2014, and are fiercely against plans to increase retirement age, or making it more flexible.

Dagmar Schmidt, deputy chair of the SPD parliamentary group, said that increasing the retirement age “won’t happen with us because it means reducing pensions for millions of pensioners who simply cannot work until they are 70, or longer”.

The SPD will instead push to invest in rehabilitation and prevention measures to ensure that as many people as possible can continue to do their job in good health until they retire, it said.

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Luigi is IPE's Berlin-based DACH correspondent. His coverage includes regulation and the latest pensions and investments trends, and, being a native Italian, he also covers Italy’s pensions market. He has reported from Italy and Germany on international politics and business for European and US publications including USA Today, Bloomberg BNA and for the investigative magazine L’Espresso. He was previously Germany correspondent for Mergermarket covering M&A.View full Profile

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