Germany considers pension reforms to raise retirement age

The German government, led by Chancellor Friedrich Merz, is considering significant pension reforms to ensure the long-term sustainability of the system as life expectancy rises and the working population shrinks.

Proposed measures include linking the retirement age more closely to increasing life expectancy and removing incentives for early retirement. This could potentially eliminate the ‘pension at 63’ option for those with 45 years of insurance contributions. The impact of these changes would vary significantly by birth year, with those born in 1962, 1965, or 1970 likely facing a later retirement age.

Data from the Deutsche Rentenversicherung shows that the average duration of pension benefits has increased significantly, rising from 16.9 years in 2004 to 20.5 years in 2024. This trend is driven by rising life expectancy outpacing increases in the retirement age.