While Germany's chancellor Olaf Scholz has called for policies to discourage people from taking early retirement, the FDP is looking to Sweden for inspiration, considering the economic benefits of a more flexible retirement policy and how it may help plug the country’s labour shortage.

Scholz calls for cutbacks in early retirements

Germany’s chancellor Olaf Scholz has made an appeal to people over the age of 60, calling on them to delay their retirement. The SPD politician said that pension-age people delaying their retirement is a necessary step to ward off the ever-looming public pension fund crisis in Germany.

Economists have already forewarned that Germany’s labour shortage will soon mean that there aren’t enough people working and making contributions to pay the pension benefits of those who are already retired. As the country reckons and reasons with an exceptional labour shortage, the German government is exploring all avenues to remedy potential economic damage. 

Speaking to the Funke media group, Scholz made his intentions clear: "The number of people who work up to pensionable age needs to be raised." The current retirement age in Germany is 65 years and 11 months and is set to rise to 67 come 2031. However, if someone has contributed 45 years of compulsory pension payments they can begin to draw their state pension without deductions from the age of 63.

FDP wants to scrap retirement age restrictions

While Scholz has called for voluntary cutbacks to earlier retirement, the FDP is looking Sweden and reimagining how Germany could liberalise its retirement system to aid the country’s labour shortage. Under the Swedish model, which is being hailed as a way out of the crisis by FDP deputy Johannes Vogel and his party, there would be no official retirement age in Germany. 

If the same policy were adopted in Germany, you could choose when you went into retirement within a certain time frame. The fewer years you have worked, the less money you would receive upon retirement. It is thanks to the Swedish government's model that the Scandinavian country has the highest de facto retirement age in all of Europe.