New Trends in Gradual Retirement in Germany*

Until recently, there was a social consensus in Germany concerning early retirement which had lasted for almost two decades. As well as most of those directly concerned, this consensus included, for different reasons, nearly all the important social groups, including the trade unions: early retirement was not only «tacitly » accepted, butin many cases also actively promoted and even financially «sweetened». One of the main reasons why this «grand early retirement coalition » lasted for more than twenty years was the situation on the labour market, because early retirement was seen by everybody as an instrument for creating new jobs or securing existing ones. Although the future situation on the labour market is expected to continue to be poor, even in the medium term, this consensus is now about to be abandoned. Since February 1996, there has been a general «pensions compromise » in Germany which basically means: a stop to early retirement and the substitution of part-time work for older employees instead of early retirement. The compromise has the following main ele-ments: From 1997 onwards, the age limit for early retirement, which is currently 60, will be rai-sed in annual steps to 61 (end of 1997), 62 (end of 1998) and 63 (end of 1999). While there will still be the possibility of retiring up to three years earlier, though from a higher normal retirement age (63 in 1999) and with pension reductions of (an actuarially calcu-lated) 3.6 percent per year of early retirement, for retirement three years ahead of the normal age, this will mean a permanent pension loss of almost 11%