German Pension Commission Recommends Mandatory Stock Investments as Retirement Age Tied to Lifespan
23.06.2026 - 07:46:36 | boerse-global.de
A 76-page final report from Germany's pension reform commission, containing 33 recommendations, landed on the federal government’s desk this month. The package targets a fundamental overhaul of the country's pay-as-you-go system — and it doesn't stop at raising the retirement age.
The most controversial element: a mandatory funded pillar modeled on Sweden. Starting in 2028, workers and employers would each pay 0.5 percent of gross wages into a state-managed investment fund, rising to one percent each (2 percent total) by a later date. The capital would be pooled in a sovereign wealth fund or managed by the Bundesbank. The aim is to keep the pension level (the ratio of a standard pension to average earnings) at 48 percent through 2031 and lift it to 50 percent from 2040 onward.
Employers are already pushing back. Arbeitgeberpräsident Rainer Dulger warned that the capital pillar alone could add 35 to 40 billion euros annually in extra costs.
Beyond the new stock component, the commission proposes severing the link between calendar age and retirement. From 2032, the standard retirement age would automatically adjust as life expectancy rises using a “2:1 model”: for every three additional months of life expectancy gained, the retirement age would increase by two. The projections are stark. A 42-year-old today would need to work until 68; a baby born in 2022 would face a retirement age of 70. The threshold could hit 67.5 as early as 2041.
The cherished “pension at 63” for those with 45 contribution years would be abolished entirely. For workers with 35 years of contributions, the earliest possible retirement age with deductions would rise from 63 to 64. A hardship clause would let people with health issues retire two years early without penalties.
Labor Minister Bärbel Bas called the recommendations a “Gesamtkunstwerk” — a total work of art — but promised transition periods and protection for existing entitlements.
The commission also wants to expand the contributor base. New self-employed people, members of parliament, and corporate executives would be required to join the statutory pension system. Most mini-jobs — except those held by pupils — would also become fully taxable and contribution-paying.
Meanwhile, the German Pension Insurance (DRV) warned that planned cuts to federal subsidies of four billion euros in 2027 could push the contribution rate as high as 18.8 percent as early as next year. The DRV’s sustainability reserve stood at 41.3 billion euros at the end of 2025.
Reactions have been mixed. Economic expert Monika Schnitzer and the BDI praised the proposals. Unions Verdi and IG Metall expressed disappointment, especially over the higher retirement age. The commission also updated rules for Germany-Australia cooperation, streamlining the counting of insurance periods and preventing dual coverage for posted workers staying up to 48 months.
