Germany Rethinks Partial Retirement as Older Workers Split Between Early Exit and Staying On
Published on 07/18/2026 at 21:12 | Redaktion boerse-global.de
The federal government's advisory commission on pension security is proposing to scrap the popular "block model" of partial retirement – a move that would reshape how employees over 55 phase into old age. Under the plan, only the equal-distribution model would remain, while the minimum entry age would rise from 55 to 58.
The reform debate comes as fresh data from the DAK-Gesundheitsreport 2026 and an IW study published in June paint a stark picture of contradictory trends among older workers. While a majority of those aged 50 and above want to retire early, a growing minority is choosing to keep working even after drawing a pension.
Health is a major driver of early exit decisions. The DAK survey found that in North Rhine-Westphalia, roughly 53 percent of employees aged 50 and older plan to retire before the standard retirement age. In Hamburg the figure is 45 percent, in Bremen 49 percent, while Baden-Württemberg and Schleswig-Holstein both sit at 42 percent. Among respondents reporting poor health, the willingness to leave early jumps sharply – to 59 percent in Schleswig-Holstein alone.
Although older employees are rarely signed off sick compared with younger colleagues, their absences last nearly twice as long. In North Rhine-Westphalia, workers over 50 average 16.7 sick days per year versus 8.3 for those under 50.
At the same time, the IW study documents a sharp rise in early retirees who continue to hold down a social-security-contributing job. Since earnings limits were abolished in 2023, the share of such workers among those with 45 or more contribution years jumped from 18 percent in 2022 to 25 percent in 2023. For those with 35 contribution years, the rate climbed from 8 to 14 percent.
People are increasingly willing to accept permanent pension deductions in order to exit earlier. The proportion of new pensioners with reductions rose from 21.7 percent in 2020 to 24 percent in 2024. Experts say the system sends contradictory signals and have called for a review of the rules that allow penalty-free early retirement for certain groups.
As an alternative to partial retirement, policymakers are looking at so-called time-value accounts – long-term working-time savings schemes. Consulting firm WTW notes such accounts offer companies off-balance-sheet advantages: they require no provisions on the balance sheet and do not trigger additional pension insurance contributions.
Internationally, other countries are experimenting with strategies to retain older workers. In July, Hanoi's People's Council adopted a resolution promoting a "silver economy" – including investment incentives for care facilities and financial support for firms where at least 30 percent of staff are older. Starting September, Vietnam's education ministry will also allow schools to offer permanent contracts to retired teachers, aiming to keep experienced educators in the classroom.
The global direction is clear: older professionals are no longer viewed as a cost burden but as a critical resource for stabilizing labour markets and economies. Germany's partial retirement reform, if enacted, would mark a significant step toward aligning its system with that thinking.
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