German pension commission proposal to abolish the retirement-at-63 rule, Digi Mart USA News (Germany): The Pension Commission for Old-Age Security recommends a deep cut to the retirement entry age. Neither a new pension based solely on the number of contribution years nor the existing unreduced pension after 45 insurance years should continue.
In its place, workers with health impairments would receive a new route into retirement. Anyone unable to continue their long-held occupation could, after a health assessment, leave work two years before the standard retirement age without deductions.
This proposal is not yet law. The federal government must first draft a bill, and opposition is already growing within the CDU/CSU, the SPD and the federal states against abolishing the so-called retirement at 63.
The commission rejects two models. The first was a proposal to tie retirement solely to a number of contribution years, without an additional minimum age.
Under that model, a worker who started at 16 could retire earlier after 45 or 47 years than a university graduate who entered the workforce late. The commission explicitly rejects this model.
The second recommendation is to abolish the existing old-age pension for long-serving insured persons under Section 38 of Social Code Book VI. Currently, insured persons with 45 insurance years can draw this pension two years before their personal standard retirement age without deductions.
For the 1964 birth cohort and all younger cohorts, the deduction-free age limit is 65, provided 45 insurance years are reached.
The commission argues that contribution years alone do not accurately reflect health burdens. A long insurance record does not automatically prove that someone performed especially heavy physical or mental work.
Conversely, people with interrupted work histories often fail to meet the required waiting period, including those with long unemployment, low incomes, family-related breaks or late entry into the workforce.
A study by the German Institute for Economic Research of the 1957 birth cohort showed clear differences. Under the narrower definition of today’s 45-year rule, only about 41 percent of the studied cohort met the requirement.
In the lowest income group, roughly four percent reached the threshold, while in the highest income group nearly two-thirds did. Women, people with several children and insured persons with longer training periods also reached 45 years far less often.
The commission also points to the principle of insurance. Under current rules, a person who has earned the same number of earnings points in a shorter period has no comparable option for deduction-free early retirement as someone with 45 years.
The recommendation goes beyond rejecting a new contribution-years model. The deduction-free retirement entry for long-serving insured persons should be abolished as early as possible, subject to the constitutionally required protection of legitimate expectations.
According to the commission report, since 2015 about 30 percent of newly retiring insured persons used this option. The average initial pension in 2025 was 1,677 euros, well above the average pension with deductions for long-serving insured persons.
According to the commission’s calculations, the pension insurance could immediately save about 430 million euros per new retirement cohort and benefit year if affected persons instead drew a reduced early pension. If all affected persons postponed their retirement start by one year, the report estimates relief of around 6.5 billion euros per entry cohort.
For insured persons, abolition would have significant consequences. Even 45 or more insurance years would no longer be enough to leave before the standard retirement age without reduction based on insurance duration alone.
As a replacement, the commission proposes a new retirement entry for people with health impairments in cohorts close to retirement. Requirements would be at least 35 insurance years and an individual health assessment.
The assessment would not only ask whether any activity on the general labor market is still possible. Decisively, it would examine whether the insured person can still manage their last long-held field of work given health limitations.
Those who qualify could retire two years before their personal standard retirement age without deductions, and three years earlier still with permanent deductions. With a standard retirement age of 67, deduction-free retirement would start at 65.
Under the commission model, early entry could be opened from age 62, but with reductions. The new route would not be an ordinary reduced earning capacity pension.
Under current law, most insured persons are assessed on how many hours they can still work on the general labor market. Those who can work less than three hours daily are generally considered fully reduced in earning capacity.
With at least three but fewer than six hours, a partial reduced earning capacity pension may be considered. A roofer who can no longer work on construction sites due to a spinal condition, but can still perform light work for at least six hours, normally has no entitlement to a reduced earning capacity pension.
The new route could close exactly this gap for older insured persons. The commission also wants to revise the assessment of the three-hour threshold for reduced earning capacity pensions, giving greater weight to the actual placement prospects of people with health limitations.
Many details of the health assessment remain open. The report does not define the age from which an insured person counts as close to retirement.
It is also unresolved how many years someone must have worked in their last field and what severity of illness would be required. It is unclear which medical findings would have to be submitted and how the German Pension Insurance would assess the previous occupation.
The legislature would need to define terms such as “long-held occupational field” and “serious health limitation” with legal certainty. For those affected, the process would change considerably from today’s 45-year pension.
Currently, entitlement arises once the waiting period is met and the age limit reached, without medical assessment. In the future, the outcome could depend on medical reports, expert opinions and an evaluation of the previous workplace.
People with hard-to-measure pain, mental illness or fluctuating capacity could face greater difficulty proving their limitations.
The early pension with deductions would also begin later. Under current law, insured persons with at least 35 insurance years can generally draw the old-age pension for long-serving insured persons from age 63.
For each month before the personal standard retirement age, 0.3 percent is permanently deducted. A start four years early results in deductions of 14.4 percent.
The reduction applies for life and regularly also affects any survivor’s pension. The commission recommends raising the earliest entry age promptly from 63 to 64.
Afterward, this age limit would rise together with the standard retirement age, maintaining a three-year gap between the two limits. Those who still wish to leave earlier could, under certain conditions, fully or partly offset the deductions through special payments.
Whether this is financially worthwhile depends on the personal pension level, tax burden and expected duration of payment.
Special payments cannot buy an earlier retirement start. They can offset the financial deductions but do not replace the mandated minimum age or the required insurance periods.
If the age limit rose to 64, this pension would therefore generally be possible only from age 64, even with deductions fully offset.
The commission proposes that after 2031 the standard retirement age be raised in line with rising life expectancy under a statutory rule. One additional year of life expectancy would be split under the proposal into eight months of longer working life and four months of longer pension receipt.
Based on current assumptions, the standard retirement age would rise between 2031 and 2041 from 67 to about 67 years and six months. Age limits would have to be set at least five years in advance, to prevent cohorts close to retirement from being caught off guard by a later start.
For health-burdened insured persons, the new special entry would also shift later. If the standard retirement age were 67 years and six months, the deduction-free health pension entry would be possible only at 65 years and six months.
Separately from the proposed health pension, the old-age pension for severely disabled persons would remain. It requires a degree of disability of at least 50 and a waiting period of 35 years at the start of the pension.
This pension type also allows deduction-free retirement before the standard age and an even earlier start with deductions. Exact age limits depend on birth year.
The new health route would matter particularly for people whose impairments do not reach a degree of disability of 50 but who can no longer perform their previous occupation.
The commission demands that the deduction-free pension after 45 insurance years be abolished at the earliest possible date. At the same time, lawmakers must take into account the expectations of people who have already planned their retirement under current rules.
Possible solutions include transitional rules by birth cohort or protection for insured persons close to the previous retirement start. The report does not indicate which cohorts might remain under current law.
Politically, it is therefore far from settled that the recommendation will become law unchanged. Several minister-presidents and politicians from the CDU/CSU and SPD demand that the deduction-free pension after 45 years be kept or at least that generous exceptions be granted.
Until a law is promulgated, existing rules continue to apply. Insured persons cannot derive new entitlements from the commission report, nor lose existing entitlements because of it.
Before filing for a pension, people planning their retirement start should have their creditable periods checked against the detailed pension statement to confirm which periods actually count toward the required 35 or 45 insurance years. Child-rearing and non-professional care can also count, while school and university periods are not credited toward the 45-year waiting period.
Notably, unemployment benefit received in the last two years before the pension start generally counts only if the receipt was caused by the employer’s insolvency or complete closure of business. Early clarification with the German Pension Insurance helps identify missing months before the planned departure from work.
An early pension application does not automatically secure today’s conditions. What counts is the law in force at the time, including any transitional rules.
Before resigning or signing a termination agreement, insured persons should clarify their possible retirement start and financial consequences individually with the German Pension Insurance.
Practical example: a roofer could benefit while a healthy colleague would lose. Martin, 65, has 39 insurance years and worked as a roofer for more than three decades.
Because of severe back and knee conditions, he can no longer work on roofs, but according to medical assessment light activities would still be possible six hours daily. Under current law, Martin generally receives no reduced earning capacity pension and does not meet the 45 years for the deduction-free old-age pension.
If the commission proposal became law unchanged, he could, after a successful health assessment and with more than 35 insurance years, possibly leave work without deduction from age 65. His same-age colleague Peter, by contrast, has 47 insurance years and remains healthy.
Today Peter could retire at 65 without deduction, but after abolition of the existing rule he would have to work until the standard retirement age or accept a permanent reduction.
