Germany's pension reform reshapes retirement benefits and minijob rules

A federal commission on pension security has presented 33 recommendations to overhaul Germany’s retirement system. Key proposals include linking the statutory retirement age to life expectancy, ending the “free‑entry” pension at age 63, and introducing a mandatory capital‑funded supplement that would be managed centrally. The commission also suggests abolishing the tax and social‑security exemptions for marginal‑employment (Minijobs), limiting the remaining exemption to students, which would raise contributions for both workers and employers.

The reforms would affect the new basic security benefit that replaces the Bürgergeld from 1 July 2026, tightening sanction rules and tightening asset‑free thresholds. A revised “Mütterrente” would equalise child‑raising credits for children born before 1992, granting an additional half‑year of credited caregiving per child. The rating agency Scope warned that while the reforms could improve Germany’s long‑term public‑finance stability and preserve its AAA credit rating, higher contribution rates may modestly curb consumer spending. The proposals have sparked political debate, with the SPD’s Berlin leader Steffen Krach criticizing aspects of the plan while the governing coalition signals intent to pass the measures before the end of the year.