A rotary encoder includes a detection device for detecting malfunction of the rotary encoder, a rotor, a stator, a shaft having a bearing configuration, and an axial bushing internally connected to the bearing configuration and rotatably arranged in a housing of the rotary encoder. A spring device is arranged for pre-stressing the bushing and the bearing configuration. A distancing arrangement is arranged to change an axial distance between the rotor and the stator by rotation of the bushing resulting from malfunction of the bearing configuration and by creating increased distance between the rotor and stator. The increased distance is sufficient to reduce detectability of angular positions of the shaft, as detected by the rotary encoder, to a level below a predetermined threshold.