Germany plans pension overhaul, raising retirement age to 67 and mandating extra contributions

The German pension commission, appointed by Chancellor Friedrich Merz, has drafted a reform that would gradually increase the statutory retirement age to around 67 by the early 2030s and ultimately to about 70 by 2090. The proposal also calls for mandatory additional pension contributions from both employees and employers to be invested in capital markets, mirroring a compulsory second‑pillar savings scheme. Early retirement at 63 after 45 years of contributions would be abolished. The reforms aim to address the strain on the pension system caused by an aging population and a declining worker‑to‑retiree ratio, issues that immigration alone cannot resolve. Business groups such as the German Industry and Commerce Chamber back the plan, while trade unions criticize the removal of early retirement and warn that higher employer contributions could raise hiring costs. The commission’s report is expected to be reviewed by the parliament before the summer recess.