Germany Blog: The next key piece of the German pension reform puzzle

Research evidence excerpt

Germany Blog: The next key piece of the German pension reform puzzle

23 June 2026

Germany Blog

Well-known reform proposals to stabilize the statutory

pension system

The aggregate effect of all the proposals below is a stabilisation of contributions to

the PAYG pension system in the medium term (compared to the status quo ante).

The overall package has been welcomed by key German business associations3

and should contribute to lifting sentiment.

n Linking the retirement age to life expectancy. The commission proposes

to link the retirement age to life expectancy from 2031 onwards. If life

expectancy were to develop according to the current median assumptions

of the Federal Statistical Office, it would mean that the standard retirement

age would gradually be raised by about six months from 67 to 67.5 years

during the period between 2031 and 2041.

n Reintroduction of the so-called sustainability factor. This automatically

dampens pension increases when there are fewer contributors. The

government is bringing back a tool that has been used previously to

manage pension finances.

n Eliminating costly early retirement programs. The qualifying age for the

early, deduction-free pension after long contribution periods (called “Rente

mit 63”) has already been phased up to 65 by 2031 and could be removed

altogether.

n “Minijobs” no longer exempt from tax and social security contributions.

Employees working only a few hours and earning up to EUR 603 per month

would no longer be exempt from tax and social security contributions. This

would primarily affect employees in the hospitality, retail, health and social

services, and could especially bring women into the statutory pension

system.

n Including self-employed persons (and members of parliament) in the

statutory pension system.