Germany's pension commission proposes major overhaul of retirement system

The government‑appointed Rentenkommission (ASK) submitted 33 reform recommendations on 23 June 2026 to Chancellor Friedrich Merz and Labor Minister Bärbel Bas. Key proposals are: - Gradually raise the statutory retirement age and link it to life expectancy, ultimately up to 70 years. An analysis by the VFA estimates that a raise to 70 could add up to €106 billion to Germany’s GDP (about 2.4 % growth) and generate more than €40 billion in extra tax and social‑security contributions, provided older workers remain healthy. - End the discount‑free early‑retirement option known as “Rente mit 63” (early pension after 45 contribution years). CDU politician Pascal Reddig called for the fastest possible abolition. - Introduce a statutory capital‑funded pillar (capital‑rente) alongside the pay‑as‑you‑go system. - Extend the pension‑calculation period for civil‑servants from two to five‑ten years and limit the “particularly favourable” rules that allow a rapid rise in pensions. Peter Bofinger warned that integrating civil‑servants into the statutory scheme would create a “massive double burden for the public sector” and would require constitutional changes. - Recommendation 17 urges that non‑contributory benefits – which left a €40 billion annual gap in 2023 – be financed fully from the general tax budget. The commission’s broader aim is to shift toward an “Erwerbstätigenversicherung” (employment‑based insurance) that treats civil‑servants like other workers while ensuring long‑term fiscal sustainability.

Quotes: “Das wäre eine massive Doppelbelastung für den öffentlichen Sektor,” Bofinger said. “Wir müssen mehr über die Voraussetzung für ein längeres Erwerbsleben sprechen: Gesundheit,” VFA president Han Steutel added.