Germany Unveils Radical Pension Overhaul: Mini-Jobs Scrapped, Retirement Age to Hit 70 by 2090s
23.06.2026 - 02:31:11 | boerse-global.de
Germans who start their careers this decade may not retire until well past 70, under proposals that would link the retirement age to life expectancy for the first time. The government-appointed pension commission handed its final recommendations to Chancellor Merz and Labour Minister Bas on Tuesday, setting the stage for a political fight over the biggest restructuring of the system in decades.
The package takes dead aim at the country’s cherished “Rente mit 63” – early retirement at 63 – which would be abolished except for genuine hardship cases. Beginning in 2031, the retirement age would be pegged to longevity using a 2:1 formula: for every three months the average life expectancy rises, workers would stay on the job two months longer. In practice, that means the retirement age climbs roughly six months every decade.
According to the commission’s projections, the threshold would reach 67.5 years by the early 2040s, 68 years by 2051, and could hit 70 for those retiring in the 2090s. The goal is to stabilise the pension level, which the panel wants held at 48% of average earnings initially, then lifted to 50% after 2040 with the help of a new capital-funded pillar.
That pillar – modelled on Sweden’s system – would divert two percentage points of gross wages into stocks and bonds, split equally between employers and employees. The annual investment volume is estimated at 35 billion euros. From 2028, one percentage point would be channelled into equities, rising to two percentage points later. To broaden the contribution base, the reform would force self?employed workers, members of parliament and corporate board members into the statutory pension scheme for the first time. Civil servants remain exempt.
By far the most controversial piece is the planned abolition of the “mini?job” status – tax?free earnings up to 603 euros a month – for everyone except school students. Currently, 6.8 million people hold mini?jobs, and another 6.2 million are in midi?jobs subject to reduced contributions. The commission argues that mini?jobs trap workers in a low?income loop, leading directly to old?age poverty, and that they crowd out regular, fully insured employment. The Institute for Labour Market and Vocational Research estimates the current model destroys about 500,000 jobs that would otherwise be social?security liable.
If the mini?job exemption is scrapped, the state expects to collect an extra 4.5 billion euros annually in social contributions. But the flip side is a sharp cost increase for those jobs: contributions could rise from roughly 31% today to over 38% from 2027 onwards, making low?wage labour dramatically more expensive for employers.
Reactions are sharply polarised. The German Retail Association (HDE) warned that hundreds of thousands of positions are at risk in the retail sector alone. HDE managing director Genth said the mini?job cut “would destroy the foundation of flexible employment.” Economist Schneider went further, predicting a surge in undeclared work worth up to 25 billion euros from 2027 as employers and workers seek loopholes.
On the other side, Verdi chairman Werneke called the mini?job system a dead end and praised the reform for preventing old?age poverty. The German Council of Economic Experts member Grimm said the proposals were sensible because they improve work incentives for low earners. The youth wing of the Union parties hailed the plan as a generational project, while the Left Party and the Young Socialists accused the government of engineering a back?door pension cut for millions.
