Germany pushes pension reform linking retirement age to life expectancy

The German government, led by Chancellor Friedrich Merz, plans to adopt all 30 proposals from an expert commission to overhaul the pension system. The package aims to raise pension levels, lower contribution rates, link the statutory retirement age to life expectancy (projected to rise to 67.5 years in 2041 and 70 years by the 2090s), abolish early retirement at 63 with limited exceptions, and introduce a capital‑pillar that will invest 0.5‑2 % of gross wages in the stock market. Merz called the reforms “of the highest importance” and described the capital‑pillar as a “bright idea”.

The plan has sparked a political storm. Opposition parties, trade unions and the AfD warn of hidden cuts and potential growth in undeclared work, especially as mini‑jobs would be restricted to students. Labour Minister Bärbel Bas hailed the proposals as a “full work of art”. The reforms also seek to broaden coverage to self‑employed workers and other groups currently outside the system.