A pension taken early is permanently reduced

You can take your old-age pension early at the age of 62, i.e. an early old-age pension. State and local government employees as well as seamen can, under certain conditions, draw an early old-age pension prior to this.

Taking the pension early reduces the amount of the pension permanently, because the accrual of the pension is incomplete. Moreover, the accrued pension is smaller due to a reduction for early retirement, which is 0.6 per cent for each month for which the pension is taken early before the age of 63. By reducing the pension due to early retirement, the pension capital accrued up to that point is paid for a longer period of time.

Taking the pension early by a year will reduce the accrued pension by 7.2 per cent. If you work at the age of 62, the pension accrues at the rate of 1.9 per cent of the salary, and at the age of 63 the accrual rate is as much as 4.5 per cent of the salary a year. Compared, for example, with continuing the employment up to the age of 65, the pension may be reduced by one fifth.

An employee retiring on an early old-age pension must terminate the employment from which he or she retires. Other parallel employment or self-employment may possibly still continue. A self-employed person does not have to end his or her self-employment.