International Social Security Review

Volume 61, Issue 4, Pages 95-112

Published Online: 25 Sep 2008

 

 

Between labour market and retirement pension — flexible transition as a new paradigm for ageing societies?

Stephan Bredt 1

  1 Legal Advisor for Social Policy to the Bundestag, Germany

Correspondence to  Stephan Bredt, Swinemünderstrasse 126, 10435 Berlin. Email: StephanBredt@gmx.de.

Copyright Journal compilation © 2008 International Social Security Association

KEYWORDS

demographic aspect • old age benefit • flexible retirement • labour force participation • social security reform • Germany • European Union • OECD

ABSTRACT

Increasing the pensionable age due to rising life expectancy meets strong political resistance. For health and labour market reasons it will always be impossible for some to achieve full pension eligibility directly from employment. Even if early retirement options are not restricted the scope for an accumulation of earnings to fund an early pension is often narrowly defined. Consequently, it is impossible for early retirees to compensate for the reductions in the pension they receive. Contrary to the general tendency to increase the pensionable age an alternative reform proposal is currently under discussion in German social policy circles. This involves free choice of retirement at age 60; unlimited accumulation of additional pension entitlements whilst earning; actuarial deductions for early retirement; and consideration of life expectancy in making adjustments to pension awards. This solution relieves the public pension system financially, raises the attractiveness of senior citizens on the labour market, offers the opportunity for a self-determined transition from work to retirement and reduces political resistance to pension reform. The effect on the labour market for senior citizens remains to be examined.

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