German coalition ministers meet to advance pension, tax and work‑time reforms

Finance Minister Lars Klingbeil presented two income‑tax reform options to the coalition leadership – a modest plan easing small‑ and middle‑income earners by about €10 billion and a larger one costing roughly €25 billion. The proposals aim to fund the relief through measures such as a richer‑tax increase, higher VAT, subsidy cuts or other savings.

The government‑appointed Rentenkommission submitted 33 recommendations, including the abolition of the “Rente mit 63” early‑retirement benefit, raising the age for a discounted early pension from 63 to 64, limiting new civil‑service appointments to core sovereign tasks, and extending the pension‑calculation waiting period from two to five‑ten years. It also suggested restricting beamtenpensions to those with hoheitliche duties.

Ahead of the Koalitionsausschuss meeting in the Chancellery, the heads of the CDU/CSU and SPD – Friedrich Merz, Bärbel Bas, Lars Klingbeil, and others – discussed financing the reform package, the status of minijobs (whether they should become pension‑liable), and work‑time flexibility. JU leader Johannes Winkel warned against “Hektik”, called for tax relief exceeding €20 billion, and criticized opposition from the Union. Ministers stressed the need for a balanced counter‑financing strategy before the summer break, with a 2027 budget to be presented and health‑care financing, care‑insurance stabilization and other key reforms slated for final approval.

The coalition aims to finalize the reform package before the parliamentary summer recess, seeking a coordinated “Gesamtkunstwerk” that links pension, tax, labour‑market and health reforms.