Germany’s Pension Overhaul: Mandatory Capital Pillar and Higher Retirement Age Trigger Sharp Backlash
Published on 06/24/2026 at 14:03 | Redaktion boerse-global.de
A comprehensive pension reform blueprint landed in Berlin on June 23, when the Alterssicherungskommission handed Chancellor Friedrich Merz and Labour Minister Bärbel Bas a 33-point package that would fundamentally reshape Germany’s retirement system. The government has pledged to implement the recommendations in full and quickly.
The most far-reaching shift is financial. Starting in 2031, a mandatory, parity-financed capital pension will be introduced, adding two percentage points to the overall pension-insurance contribution rate. The total contribution will climb above 22 percent. At the same time, the sustainability factor will be reinstated in the calculation formula. The government promises a stable pension level of up to 70 percent of the last net wage, and existing pensions will not be cut.
The retirement age becomes a moving target linked to life expectancy. By 2041, the threshold rises to 67.5 years. From 2042 onward, it will be automatically adjusted: every ten years adds six months. The penalty-free early retirement option is eliminated. Workers can exit at age 64 at the earliest, but only with deductions.
On the revenue side, the system’s base broadens significantly. Self-employed individuals and politicians will now be required to contribute. All mini-jobs become subject to pension insurance. Civil servants remain exempt — instead, the government plans to restrict new hirings of Beamte.
People with health impairments gain some relief. The so-called trial period — a phase during which disabled workers can test their ability to work without losing pension entitlements — will double from six to twelve months. Older employees in physically demanding occupations get easier access to disability pensions. A new allowance in basic income support ensures that statutory pension payments are counted less heavily against benefits.
Reaction has been fierce. Trade unions, employer associations, and the VdK social welfare group all condemned the rising contributions and the higher retirement age. The ruling coalition, however, stresses its unity. The coalition committee will review the details on July 1. Legislative work is set to begin after the summer break, with a target finish by the end of 2026.
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