CSU proposes higher early-retirement deductions as Berlin cuts pension subsidy

The CSU's leader in the Bundestag, Alexander Hoffmann, wants the deduction applied to early retirement raised from 0.3 to 0.4 percent per month, telling the Redaktionsnetzwerk Deutschland the step is overdue.

Hoffmann's proposal follows a deeper cut to the federal grant that finances the statutory pension scheme. The government transfers just under 100 billion euros a year to the pension insurance fund; next year it will reduce that subsidy by three billion euros rather than the one billion previously planned.

Gundula Rossbach, head of the Deutsche Rentenversicherung, said the reductions of recent years now add up to 11 billion euros. She appealed to the government: "Whoever transfers society-wide tasks to the pension insurance should also pay for them."

Rossbach said the fund's financial reserves will fall faster as a result. The contribution rate, stable for years at 18.6 percent, will have to rise more sharply in 2028 — "probably to 19.8 percent", she said.

Retirees can currently bring a pension forward by up to four years, an option used by about one in three. Each month taken early costs 0.3 percent of the pension, adding up to as much as 14.4 percent for someone retiring at 63, for life. Under Hoffmann's proposal that reduction would reach 19.2 percent, and fewer people would be likely to take the early route.

Hoffmann said the change should apply from the 2027 budget year, with the Federal Labour Ministry to present a concrete timetable. A ministry spokesperson said the draft law accompanying the 2027 budget contains no rules on deductions or supplements in pension insurance, and that the question will be discussed when the government implements the recommendations of the old-age security commission. Raising deductions for early retirement was explicitly not among those recommendations.

The parliamentary group leaders of the Union and the SPD disagree on the timetable for the reform, and an SPD politician said political debates are still needed, particularly on the "retirement at 63".